Question

Which of the following statements about utility is true?

A)It is the same as usefulness.
B)Total utility diminishes as soon as additional units of a good are consumed. C)Utility is objectively determined, meaning a good should provide the same satisfaction to whomever consumes it.
D)Utility is difficult to measure quantitatively

Answer 1

Utility is difficult to measure quantitatively as it is subjective and varies between individuals, making statement 'D' the correct answer.

Step-by-step explanation:

Among the given statements about utility, the one that is true is 'D) Utility is difficult to measure quantitatively.' Utility is a subjective concept that describes the satisfaction or happiness that a consumer derives from consuming goods and services.

While some economists use the hypothetical unit called 'utils' to measure utility, it remains a highly personalized and subjective measure that cannot be quantitatively standardized across different individuals.

In contrast, the idea that total utility diminishes as soon as additional units of a good are consumed refers to the law of diminishing marginal utility, which states that the marginal utility of a good decreases as more units are consumed, not the total utility.

Utility is difficult to measure quantitatively as it is subjective and varies between individuals, making statement 'D' the correct answer.