If Bella eats one piece of pie, she receives a utility of 10. If she continues eating, a second piece of pie will yield a marginal utility of 8, a third will yield a marginal utility of 2, and a fourth will yield a marginal utility of -2. Which of the following statements is true?
A)Bella's marginal utility is not diminishing.
B)Bella's total utility will decrease if she eats a third piece of pie.
C)Bella's total utility will be maximized if she eats three pieces of pie.
D)Bella's total utility decreases after the first piece of pie.

Question

Quizplus · Accepted Answer

The marginal utility decreases with each additional piece of pie, indicating diminishing marginal utility. Bella's total utility increases with each of the first three pieces (10 for the first, +8 for the second, +2 for the third), but decreases if she eats a fourth piece due to the negative marginal utility. Therefore, her total utility is maximized at three pieces.

If Bella Eats One Piece of Pie, She Receives a Utility