Total utility is determined by: A. multiplying the marginal utility of the last unit consumed by...
Total utility is determined by:
A. multiplying the marginal utility of the last unit consumed by the number of units consumed.
B. multiplying the marginal utility of the last unit consumed by the unit price.
C. adding up the marginal utilities of each unit consumed.
Homework Answers
Total utility = Sum of the marginal utilities of each unit consumed
TUn = MU1+MU2+... +MUn
From the law of diminishing marginal utility, we know that the marginal utility of a good decreases as the consumption of the good increases. Therefore, for each additional unit, the marginal utility decreases and hence it is not equal for all the units. Therefore, the total utility can't be obtained by multiplying the marginal utility of last unit by the number of units.
Price of the product has nothing to do with the marginal and total utility of the good. Utility of a good is it's characteristic property and hence doesn't change with price.
Ans: c. Adding up the marginal utilities of each unit consumed
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