Question

The rate at which TU change is indicated by

Answer 1

When a consumer goes on to consume the units of a commodity continuously the marginal utility derived from the successive units of the commodity goes on to fall constantly while other factors are held constant.

From the above statement regarding the consumer behavior the relationship between total utility (TU) and marginal utility (MU) is deducted as under:

MU is the rate of change of TU.

When the MU decreases, TU increases at decreasing rate.

When MU becomes zero, TU is maximum. It is a saturation point.

When MU becomes negative, TU declines

Answer 2

The rate at which TU change is indicated by Marginal Utility.

Explanation:

• Total utility is the aggregate amount of satisfaction that a consumer receives through the consumption of a specific good or service.
• Marginal utility is the added satisfaction that a consumer gets from having one more unit of a good or service.
• Total utility is the summation of marginal utility of all units of consumption. Therefore, total utility changes at the rate of marginal utility.