Which of the following statements is correct?
- As total utility increases, the marginal utility also increases
-
The marginal utility is a always zero whenever the total utility reaches the maximum
- The total utility is at maximum whenever marginal utility is at it's maximum
- There is no relationship between total utility and the marginal utility
The correct answer is: B
Explanation
Marginal utility is the slope of the total utility curse. At maximum point slope of total utility is equal to zero. Therefore the marginal utility is also zero when total utility reaches its maximum level. Total utility is the sum of utility which consumer gains from consumption of certain goods and services.