Question

Write three relationships between total utility and marginal utility.

Hint:

As more units of a good are consumed, marginal utility tends to decrease, which is known as the law of diminishing marginal utility.

Answer 1

Step 1: Understanding total and marginal utility.
Total utility is the total satisfaction or benefit received from consuming a certain quantity of goods or services. Marginal utility is the additional satisfaction obtained from consuming one more unit of a good or service.

Step 2: Relationships.
1. Total utility increases as marginal utility is positive.
2. Total utility reaches its maximum when marginal utility becomes zero.
3. Total utility decreases when marginal utility is negative (i.e., when consumption leads to a decrease in satisfaction).

Step 3: Conclusion.
Thus, the relationship between total and marginal utility is crucial in understanding consumer behavior.