Question

In the following Question, read the following statement and choose the correct alternative among those given below:

Statement 1: When consumption is increased beyond the point of satiety, total utility starts rising. 

Statement 2: MU is maximum at the point of satiety.

Options

• Both the Statements are true.

• Both the Statements are false.

• Statement 1 is true and Statement 2 is false.

• Statement 2 is true and Statement 1 is false.

Answer 1

Both the Statements are false.

Explanation:

Beyond satiety, MU becomes negative and total utility starts falling, not rising. At the point of satiety, MU is zero not maximum while total utility is at its maximum.