Maximum utility is achieved when
A)Total revenue is the greatest.
B)The price elasticity of demand is 1.0.
C)Marginal utility is zero.

Question

Quizplus · Accepted Answer

Maximum utility is achieved when marginal utility is zero. This is because utility refers to the satisfaction or happiness that a consumer receives from consuming a good or service. The law of diminishing marginal utility states that as a consumer consumes more and more of a good or service, the additional satisfaction or happiness received from each additional unit consumed eventually diminishes. Therefore, at some point, the additional satisfaction received from consuming one more unit of a good or service becomes zero. This point is where maximum utility is achieved, as any additional units consumed beyond this point would actually decrease the overall level of satisfaction or happiness.

Maximum Utility Is Achieved When