Statement I: If you knew a person's demand schedule,you could figure out her marginal utility schedule.
Statement II: As a person consumes more and more of a service,her total utility rises and her marginal utility declines.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question

Quizplus · Accepted Answer

Statement I is true because a person's demand schedule shows the quantity of a good or service that she is willing to buy at different prices. By analyzing changes in the price and quantity demanded, we can trace the consumer's willingness to pay for each unit of the good or service, which directly relates to her marginal utility schedule.

Statement II is also true since total utility rises as consumption of a good or service increases, but the marginal utility of each additional unit consumed declines. This diminishing marginal utility is the foundation of the law of demand, which states that as the price of a good or service falls, consumers will demand more of it.

Statement I: If You Knew a Person's Demand Schedule,you Could