Which statement is true?
A)If you know a person's demand schedule,you can find his total utility,but not his marginal utility.
B)If a good is free,you will consume more and more of it until your marginal utility is zero.
C)If a good is free,you will consume more and more of it until your total utility is zero.
D)If you know a person's demand schedule you can find her marginal utility,but not her total utility.

Question

Quizplus · Accepted Answer

This is a fundamental principle of economics known as the law of diminishing marginal utility. As you consume more units of a good, your marginal utility (the additional utility you get from consuming one more unit) decreases until it eventually reaches zero. Therefore, if the good is free and you can consume as much as you want, you will keep consuming until your marginal utility is zero. Option A is incorrect because you can find both total and marginal utility from a demand schedule. Option C is incorrect because it doesn't make sense - if the good is free, there is no reason why you would continue to consume it until your total utility becomes zero. Option D is also incorrect because knowing a person's demand schedule allows you to calculate both total and marginal utility.

Which Statement Is True