CMA Foundation · Fundamentals of Business Economics and Management · Utility, Wealth, Production
Meena's total utility from a good reaches its maximum of 90 utils at the 6th unit. What is the marginal utility of the 6th unit if total utility from the 5th unit was 90 utils?
The marginal utility of the 6th unit is zero. Total utility stays at 90 utils, so the change is nil. Total utility is maximum when marginal utility is zero, which marks the satiety point; negative marginal utility would mean total utility falls.
- APositive 90
- BNegative
- CZeroCorrect
- DPositive but diminishing
Explanation
MU6 = TU6 - TU5 = 90 - 90 = 0. Total utility is at its maximum when marginal utility is zero, the point of satiety. A negative MU would occur only if TU fell after the 6th unit.
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