Q3 of 31 Page 1

Which of the can be referred to as ‘point of satiety’?

i) Marginal Utility is negative


ii) Marginal utility is zero


iii) Total Utility is rising


iv) Total Utility is falling

Marginal utility is zero


Explanation


The utility is the want-satisfying power of commodities. Total utility (TU) is the sum of the total utilities derived from the consumption of a defined unit of commodities. Marginal utility (MU) is the addition made to the total utility when an additional unit of a good is consumed. The relationship between TU and MU can be explained as:


• When TU increases at an increasing rate, MU rises.


• When TU becomes maximum, MU becomes 0. This is the point of satiety.


• When TU falls, MU becomes negative.



More from this chapter

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1

If it is given that the total variable cost for producing 15 units of output is Rs 3000 and for 16 units is Rs 3,500. Find the value of Marginal Cost.

 2

Ceteris Paribus, if the government provides subsidies on electricity bills, what would be the likely change in the market demand of desert coolers?

 4

Which of the following is an assumption of Production Possibility Frontier?

i) Resources are not fully employed.


ii) Resources are not equally efficient for the production of the two goods.


iii) Resources are not efficiently employed.


iv) Resources available are not fixed.

 5

State any two central problems under ‘problem of allocation of resources’.