At the point where total utility begins to decline MU is

Analyze the question The question asks about marginal utility (MU) at the point where total utility (TU) begins to decline.

Concept

• Total utility (TU) is the total satisfaction from consuming all units of a good.
• Marginal utility (MU) is the extra satisfaction from consuming one more unit: MU = ΔTU / ΔQ.
• The law of diminishing marginal utility says that as you consume more units, MU keeps falling.

The relationship between TU and MU

1. While TU is rising, MU is positive (but falling).
2. When TU reaches its maximum (the saturation point), MU = 0.
3. When TU starts to fall, each extra unit takes away satisfaction, so MU is negative.

Step-by-step reasoning Take an example:

| Units | TU | MU | |---|---|---| | 1 | 10 | 10 | | 2 | 18 | 8 | | 3 | 24 | 6 | | 4 | 28 | 4 | | 5 | 30 | 2 | | 6 | 30 | 0 | | 7 | 28 | -2 |

TU peaks at unit 6, where MU = 0. At unit 7, TU begins to decline from 30 to 28, so MU = -2, which is negative.

So at the point where TU begins to decline, MU is negative.

(Note: option E, zero, describes the point where TU is at its maximum, just before it starts to decline. This is the common trap in this question.)

Answer: D. negative

Exam tip Remember the sequence for TU and MU:

• TU rising → MU positive
• TU at maximum → MU zero
• TU falling → MU negative

"Zero is the peak, negative is the fall."