Economics - Study Mode
[#606] When total utility becomes maximum, then marginal utility will be
Correct Answer
(C) Zero
Explanation
Solution: When total utility becomes maximum, then marginal utility will be Zero. It is based in the law of diminishing marginal utility which says 'as more and more units of a good are consumed, MU i.e level of satisfaction derived from each successive unit goes on falling because desire for that commodity tend to fall.
[#607] Utility means
Correct Answer
(A) Power to satisfy a want
Explanation
Solution: Utility means power to satisfy a want. It is a quality possessed by a commodity or service to satisfy human wants. Utility can also be defined as value-in-use of a commodity because the satisfaction which we get from the consumption of a commodity is its value-in-use.
[#608] Marginal utility is equal to average utility at that time when average utility is
Correct Answer
(B) Maximum
Explanation
Solution: Marginal utility is equal to average utility at that time when average utility is maximum.
[#609] Which one of the following is the task of the Planning Commission?
Correct Answer
(A) Preparation of the plan
Explanation
Solution: Preparation of the plan is the task of the Planning Commission. The Planning Commission is charged with the responsibility of making assessment of all resources in the country, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of resources and determining priorities.
[#610] At the point of satiety, marginal utility is
Correct Answer
(A) Zero
Explanation
Solution: At the point of satiety, marginal utility is zero. Marginal utility refers to the additional satisfaction or benefit gained from consuming one more unit of a good or service. The point of satiety is the stage where a consumer has consumed enough of a product, and any additional consumption does not add any further satisfaction or utility. Therefore, at this point, the marginal utility becomes zero. Option B: Positive This option is incorrect because if marginal utility were positive, it would imply that additional consumption still provides some level of increased satisfaction, which is not the case at the point of satiety. Option C: Maximum This option is incorrect because marginal utility is not at its maximum at the point of satiety. Marginal utility reaches its maximum before reaching the point of satiety, when each additional unit consumed provides decreasing satisfaction until it reaches zero. Option D: Negative This option is incorrect because negative marginal utility would imply that additional consumption decreases overall satisfaction, which occurs after the point of satiety, not at it. Example of correct usage: When a person has had enough water to drink, the marginal utility of an additional glass of water becomes zero, indicating they have reached the point of satiety. Any further consumption would not increase their satisfaction. Understanding marginal utility helps in analyzing consumer behavior and preferences, particularly in determining the optimal consumption level of goods and services.