Utility theory assumes that marginal utility of a good
A) increases as an individual consumes more of the good
B) decreases as an individual consumes more of the good
C) is greater than total utility as long as total utility is greater than zero
D) is constant as long as the individual derives utility from the good
E) is greater than total utility as long as marginal utility is greater than zero

Question

Quizplus · Accepted Answer

Utility theory posits the law of diminishing marginal utility, which states that as a person consumes more of a good, the additional (marginal) utility from consuming an extra unit of the good decreases.

Utility Theory Assumes That Marginal Utility of a Good