Indicate whether the following statements are True or False a)Total utility is the benefit received from...
Indicate whether the following statements are True or False
a)Total utility is the benefit received from consuming an extra unit of a good
b)According to the principle of diminishing marginal utility, as an individual consumes more and more of a good or service ,the total utility increases while the marginal utility decreases
c)Tom's marginal utility from a Sobe exceeds his marginal utility of crackers.Therefore , his total utility of Sobe must exceed his total utility of crackers
d)Marginal utility diminishes as consumption of a good decreases
Homework Answers
A) The answer is false because the total utility is the sum of utilities derived by consuming all of the units of a good. The benefit received from consuming an extra unit of a good is known as a marginal utility.
B) The answer is true because the total utility is the sum of all the marginal utility of a good. According to the law of diminishing marginal utility, the marginal utility at every unit of good decreases but at every unit of a good, our total utility is increasing.
C) the answer is true because the total utility is the sum of the marginal utility derived at every unit of a good. Therefore, if tom derives higher marginal utility from Sobe as compared to crackers then sobe must have higher total utility than crackers.
D) The answer is false because according to the law of diminishing marginal utility as the consumption of the good increases(not decreases) marginal utility derives from it decreases.
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