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Theory of consumer behaviour — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsTheory of consumer behaviour4 Marks
Question
Discuss briefly, using a hypothetical schedule the relation between marginal utility and total utility.
OR
Explain the relationship between total utility and marginal utility with the help of a schedule and diagram.

OR
How does total utility change with the change in marginal utility of a commodity? Explain.
Show that total utility is maximum and constant when marginal utility is zero.
✓

Answer

The relationship between MU and TU is as follows:
  1. When MU is positive, TU rises at diminishing rate.
  2. When MU is zero, TU is maximum and constant.
  3. When MU is negative, TU falls.
The following utility schedule and diagram illustrates the relationship:


On the basis of the schedule and diagram we infer:
  1. When MU is positive, TU will rise
  2. When MU is zero, TU is maximum and constant. (at unit 5).
  3. When MU is negative, TU falls (unit 6 onwards).

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