Question

Suppose that you observe that total utility rises as more of an item is consumed. What can you say for certain about marginal utility? Can you say for sure that it is rising or falling or that it is positive or negative$?$

Short answer

Total utility increases with increasing consumption, and marginal utility decreases with increasing consumption.

Step-by-step solution

Step 1- Introduction

Total utility is the total utility that a consumer receives after consuming all goods. Marginal utility is the utility that a consumer receives after consuming additional good.

Step 2- Explanation

As consumers consume more items,theirtotal utility increases and at the same time their marginal utility decreases. The total utility reaches the highest point and the marginal utility is zero at that point. After that, the total utility begins to decline, and at the same time the marginal utility becomes negative.

Step 3- Conclusion

This can be explained using the tables and figures below. This table shows raw material consumption, total utility (TU), and marginal utility (MU).

The total utility and marginal utility of the seven products are shown in the table above.