If marginal utility is zero,
A) total utility increases at a decreasing rate.
B) total utility increases at an increasing rate.
C) total utility is at a maximum.
D) people will not consume the good even if the price is zero.

Question

Quizplus · Accepted Answer

When marginal utility is zero, it means the consumer has reached the point of maximum satisfaction or total utility. Any further consumption of the good will not increase their satisfaction, so they will not consume more even if the price is zero. This is why option D is not correct. Option A is incorrect because if total utility is increasing at a decreasing rate, it means that marginal utility is positive but decreasing. Option B is incorrect because if total utility is increasing at an increasing rate, it means that marginal utility is positive and increasing, which is not possible when marginal utility is zero.

If Marginal Utility Is Zero