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Question : Which of the following statements is correct regarding the marginal utility of a commodity?

I. It is the change in total utility due to the consumption of one additional unit of a commodity.
II. It diminishes with an increase in consumption of the commodity.

Option 1: Both I and II

Option 2: Only II

Option 3: Only I

Option 4: Neither I nor II


Team Careers360 8th Jan, 2024
Answer (1)
Team Careers360 14th Jan, 2024

Correct Answer: Both I and II


Solution : The correct option is Both I and II .

The following is an accurate statement about a commodity's marginal utility:

I. It is the difference in overall utility brought about by using one more unit of a resource.

The additional satisfaction or pleasure obtained from consuming one more unit of an item or service is referred to as marginal utility. It is the variation in overall utility brought about by using one more unit. The second assertion is likewise true:

II. It decreases when the commodity's usage rises.

This is in line with the concept of diminishing marginal utility, which says that the additional satisfaction or utility gained from each additional unit of an item or service tends to decline as a person consumes more of it.

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