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What is the law of diminishing marginal utility?

What is the law of diminishing marginal utility?

The law of diminishing marginal utility states that all else equal, as consumption increases, the marginal utility derived from each additional unit declines. The utility is an economic term used to represent satisfaction or happiness.

What is TU when MU is zero?

When the Mu us zero, the TU is maximum.

When MU diminishes Tu will?

When MU is negative, TU decreases. Explanation: Total Utility TU depends upon the Marginal Utility MU . Marginal utility depicts the addition to total utility when an additional unit of the commodity is consumed. A negative marginal utlity suggests that additional to total utility is negative.

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When Tu is maximum MU becomes?

When TU reaches its maximum, MU becomes zero. TU stops rising at this stage. This point is known as a point of satiety.

When Tu is maximum MU is zero Agree or disagree?

Explanation: The above statement is incorrect as, when Marginal Utility MU is zero, Total Utility TU attains its maximum point i.e.thesaturationpoint . On the other hand, when MU becomes negative, TU diminishes.

Which point is known as point of satiety?

The point at which Marginal Utility of a commodity is Zero and its Total Utility is maximum, it is referred as Point of Satiety. Utility simply refers to the satisfying power of the commodity.

What is cardinal and ordinal approach?

Meaning. Cardinal utility is the utility wherein the satisfaction derived by the consumers from the consumption of good or service can be expressed numerically. Ordinal utility states that the satifaction which a consumer derives from the consumption of good or service cannot be expressed numerical units. Approach.

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Which approach is better cardinal or ordinal?

On the other hand, ordinal utility defines that satisfaction of user goods can be ranked in order of preference but cannot be evaluated numerically….Difference Between Cardinal and Ordinal Utility.

Basis for Comparison Ordinal Utility Cardinal Utility
Approach Qualitative Quantitative
Evaluation Ranks Utils

What happens to you when Tu is maximum and constant?

Both increase at first, but at a point where consumption reaches equilibrium, marginal becomes zero and total becomes maximum and constant. The marginal becomes negative, and the sum starts to fall.

When the Tu diminishes the MU becomes?

TU increases with an increase in consumption of a commodity as long as MU is positive. In this phase, TU increases but a diminishing rate as MU from each successive unit tends to diminish. 2. When TU reaches its maximum, MU becomes zero.