Question

Distinguish between total and marginal utility and discuss why marginal utility ultimately falls as a person consumes more of an item.

Short answer

The following is a discussion of the relationship between TU (total utility) and MU (marginal utility): As long as MU (marginal utility) is positive, TU (total utility) rises with increased commodity consumption.

Step-by-step solution

Introduction.

When total utility is at a maximum, marginal utility is zero, and total utility begins to decline if marginal utility is negative.

Difference between total and marginal utility.

The concept of diminishing prices is directly related to the law of diminishing marginal utility. As a product's utility decreases with increased consumption, consumers are willing to pay lower dollar amounts for more of the product.