If marginal utility is negative,total utility declines but is not necessarily negative.

Question

Quizplus · Accepted Answer

This statement is true. Marginal utility refers to the additional satisfaction or benefit that a consumer derives from consuming one more unit of a good. If the marginal utility is negative, which means that the consumer is receiving less satisfaction or benefit from the additional unit, then the total utility will still increase but at a decreasing rate. The total utility may decline eventually if the marginal utility becomes so negative that it outweighs the positive marginal utility from previous units. However, the total utility does not have to be negative just because the marginal utility is negative.

If Marginal Utility Is Negative,total Utility Declines but Is Not