Read the two statements and choose the correct option.
I. Under the law of diminishing marginal utility, total utility must eventually become negative.
II. Under the law of diminishing marginal utility, marginal utility can become zero.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer B

Correct answer: B

I is false: TU falls after saturation but stays positive for a long while; nothing forces it below zero.
II is true: MU reaches zero at the point of saturation.

Ten questions from Utility & Consumer's Equilibrium, at your own pace.

Ten questions from Utility & Consumer's Equilibrium, at your own pace.

Read the two statements and choose the correct option.I. Under the law of diminishing marginal utility, total utility must eventually become negative.II. Under the law of diminishing marginal utility, marginal utility can become zero.