When is total utility at a maximum?
A)When marginal utility is at a maximum.
B)When marginal utility is zero.
C)When marginal utility is equal to total utility.
D)When marginal utility is greater than total utility.

Question

Quizplus · Accepted Answer

Total utility is maximized when marginal utility is zero, because this is the point at which any additional unit of the good will not add any additional satisfaction. Once marginal utility becomes negative, total utility will start to decrease. Therefore, the optimal level of consumption is where marginal utility equals zero.

When Is Total Utility at a Maximum