Question

Is it possible for the total utility to increase while marginal utility diminishes? Explain.

Short answer

Yes, the marginal utility is falling. Each new utility provides a smaller benefit than the one before it, but the total utility grows.

Step-by-step solution

Definition

Total Utility and Marginal Utility: Total utility refers to the total enjoyment derived from consuming a certain quantity of a product or service. The additional satisfaction gained by consuming an additional unit of an item or service is known as marginal utility.

Explanation

The correct answer is: True.

The law of declining marginal utility asserts that all other things being equal, as consumption rises, the marginal utility gained from each extra unit decreases. Total utility is linked to marginal utility, which quantifies the additional pleasure gained from the consumption of an item or service.

Step 3:Conclusion

Therefore, the total utility will rise as long as the marginal utility is positive. When marginal utility falls below zero, total utility falls.