Which of the following statements is true?
A) Utility units are observable.
B) Total utility is equal to marginal utility.
C) Utility is gained whenever someone wants a good.
D) Marginal utility theory assumes that marginal utility diminishes as more of any good is consumed.

Question

Quizplus · Accepted Answer

Marginal utility theory assumes that as more of a good is consumed, the additional satisfaction (or utility) gained from each additional unit consumed will diminish. This is known as the law of diminishing marginal utility. Utility units themselves are not observable or quantifiable, and total utility is the cumulative satisfaction gained from consuming multiple units of a good, whereas marginal utility refers to the satisfaction gained from consuming one additional unit. It is not accurate to say that utility is gained simply from wanting a good, as actual consumption is necessary to derive utility.

Which of the Following Statements Is True