Refer to the accompanying figure to answer the questions.
-Marginal utility is negative:
A) at all levels of consumption.
B) from the consumer's seventh cupcake on.
C) never.
D) for the consumer's fifth and sixth cupcake only.
E) when marginal utility is positive.

Question

Refer to the accompanying figure to answer the questions. 
-Marginal utility is negative:
A) at all levels of consumption. 
B) from the consumer's seventh cupcake on. 
C) never. 
D) for the consumer's fifth and sixth cupcake only. 
E) when marginal utility is positive.

Quizplus · Accepted Answer

Marginal utility can be negative when the consumer has consumed enough of a good that the satisfaction they receive from each additional unit starts to decrease. This point is often referred to as the point of diminishing marginal utility. Therefore, option B is the best choice as it implies that marginal utility is negative after consuming a certain amount of cupcakes, specifically the seventh one.

Refer to the Accompanying Figure to Answer the Questions