Total utility is maximized whenever
A)marginal utility is zero.
B)marginal utility is increasing.
C)marginal utility is decreasing.
D)marginal utility is constant.

Question

Quizplus · Accepted Answer

Total utility is maximized when marginal utility is decreasing. This is because as a consumer consumes more and more of a good or service, the additional satisfaction gained from each additional unit (marginal utility) starts to decrease. When marginal utility is decreasing, total utility is maximized. If marginal utility were increasing, the consumer would continue to consume and gain greater satisfaction from each additional unit, meaning total utility would not be maximized. If marginal utility were zero, the consumer would no longer gain any additional satisfaction from consuming additional units, so total utility would not be maximized either. If marginal utility were constant, the consumer would gain the same amount of satisfaction from each additional unit consumed, but may not reach the point where total utility is maximized.

Total Utility Is Maximized Whenever