Question

When diminishing marginal utility starts happening as a person consumes more and more of a given good:

A.Total utility will decrease at at diminishing rate
B.Total utility will increase at a diminishing rate
C. Marginal utility will increase at a diminishing rate
D.Total utility will become negative

Answer 1

Diminishing marginal utility indicates a decrease in the satisfaction gained from each additional unit of a good consumed, but total utility only becomes negative if the derived utility from extra consumption is negative, which is not a typical occurrence. Total utility usually increases at a decreasing rate until further consumption becomes non-beneficial.

Step-by-step explanation:

When discussing diminishing marginal utility, it's important to clarify that while the additional happiness or satisfaction (utility) gained from consuming one more unit of a good decreases with each additional unit, the total utility does not necessarily become negative.

The law of diminishing marginal utility simply states that as a person consumes more units of a given good, the additional utility from consuming each subsequent unit is less than that from the previous unit.

For instance, if José values his first T-shirt at 22 utils and his fourth T-shirt at 18 utils, the marginal utility of the fourth shirt is less than that of the first. Nevertheless, the total utility continues to increase, just at a decreasing rate, until a point where the marginal utility might eventually become zero or even negative, prompting consumption to stop.