Post Utme Coal City University 2021 Commerce Question 36

Practice objective / multiple choice question 36 from the 2021 Post Utme Coal City University Commerce examination.

Post Utme Coal City University 2021 Commerce Objective / Multiple Choice
Question 36 POST_UTME_COAL_CITY_UNIVERSITY • 2021 • COMMERCE • objective

In a perfectly competitive market, the law of diminishing marginal utility implies that as the quantity of a good consumed increases, the marginal utility derived from each additional unit of the good will eventually decrease. However, this decrease in marginal utility does not necessarily imply that the total utility derived from the good will also decrease. Explain why.

Answer Options

A. Because the law of diminishing marginal utility only applies to individual consumers, not to the market as a whole.
Correct Answer B. Because the total utility derived from a good is the sum of the marginal utilities of each unit consumed, and as long as the marginal utility of each unit is positive, the total utility will also be positive.
C. Because the law of diminishing marginal utility only applies to goods that are consumed, not to goods that are invested in.
D. Because the total utility derived from a good is a fixed quantity that does not change as the quantity of the good consumed increases.
Correct Answer
B
Correct Option:
Because the total utility derived from a good is the sum of the marginal utilities of each unit consumed, and as long as the marginal utility of each unit is positive, the total utility will also be positive.

About This Question

This is Post Utme Coal City University 2021 Commerce Question 36. It is one of the objective questions from the 2021 Post Utme Coal City University Commerce examination.

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