Which of the following statements is true ?
A) Total utility is the extra satisfaction from the consumption of a good or service.
B) Marginal utility is the amount of satisfaction received from all the units of a good or service consumed.
C) The law of diminishing marginal utility states that as more of a good or service is consumed total utility decreases.
D) Consumer equilibrium is a combination of goods and services consumed which maximizes total utility from a given budget.

Question

Quizplus · Accepted Answer

Options A and B are incorrect as they are wrongly defined. Total utility is the overall satisfaction obtained from the consumption of a good or service, while marginal utility is the extra satisfaction derived from consuming an additional unit of a good or service. Option C is partially correct, as the law of diminishing marginal utility states that as more of a good or service is consumed, the marginal utility decreases. However, total utility may still increase even though the marginal utility decreases. Option D is the correct statement as consumer equilibrium refers to the combination of goods and services consumed that maximizes the total utility from a given budget.

Which of the Following Statements Is True