Question

When diminishing marginal utility starts happening as a person consumes more and more of a given good rev: 04_09_2018 Multiple Choice total utility will decrease at a diminishing rate. total utility will increase at a diminishing rate. marginal utility will increase at a diminishing rate. total utility will become negative.

Answer 1

Answer:

The correct answer is letter "B": total utility will increase at a diminishing rate.

Explanation:

Marginal utility refers to the additional benefit or satisfaction gained from consuming one more unit of a good or service. People buy when marginal utility is greater than marginal cost, and they do not buy when marginal utility is less than marginal cost.  

There is positive and negative marginal utility. Positive marginal utility occurs when additional items are being bought and, as a result, increases the total utility at a diminishing rate. On the other hand, the negative marginal utility takes place when the additional item purchased decreases the total utility at an increasing rate.