Question

Which of the following statements about utility is true?

A. Utility is constant for all individuals
B. Marginal utility decreases as consumption increases
C. Total utility always decreases with more consumption
D. Utility is only derived from material goods

Answer 1

Marginal utility decreases as consumption increases.

Step-by-step explanation:

The correct statement about utility is B. Marginal utility decreases as consumption increases. Marginal utility refers to the additional satisfaction or benefit a person derives from consuming one more unit of a good or service. As consumption increases, the additional satisfaction obtained from each additional unit diminishes, leading to a decrease in marginal utility.