State the following statement is True or False:
MU and TU are equal at the initial stage.
MU and TU are equal at the initial stage. -True
Explanation: Total utility TU refers to the aggregate utility, or the summation of utility, derived from the consumption of all the units of a commodity. Algebraically, TUn = MU1 + MU2 + MU3 +.............. + MUn = ∑MU At the initial stage i.e. at the first unit of consumption, Marginal Utility MU and Total Utility TU are equal. That is, MU = TU.
|Number of Units Consumed of Commodity (X)||Total Utility (TU) (utils)||Marginal Utility (MU)
MUn = TUn − TUn − 1 (utils)
|1||50*||50 − 0 = 50*|
|2||100||100 − 50 = 50|
|3||130||130 − 100 = 30|
* TU and MU are equal at the initial phase.