Law of DMU, single commodity case

Law of diminishing marginal utility states that when more and more units of a commodity are consumed, marginal utility:

• Begins to increase

• Remains constant

• Begins to decrease

• Becomes zero

Marginal utility of a particular commodity at the point of saturation is:

• Zero

• Unity

• Greater than unity

• Less than unity

What is a consumer do, when MU(in terms of money) > price of the commodity

• Continue consuming more units of commodity

• Reduce commodity's consumption

• Both (a) and (b)

• None of the above

Which of the following is not the assumptions of law of DMU

• Standard size

• Continuous consumption

• No change in quality

• None of the above

Which of the following is the correct equilibrium condition under single commodity case?

• MUx = price

• MUx > price

• MUx < price

• All of the above

What will consumer do when MU in terms of money < price?

• Continue consuming commodity

• Reduce consumption of commodity

• Any of the above

• None of the above

What will happen to TU when MU becomes negative

• TU falls

• Increases

• Both of the above

• None of the above

Marginal utility is

• Substituted satisfaction on consumption of additional unit of commodity

• Additional satisfaction on consumption of additional unit of commodity

• Both (a) and (b)

• None of the above

Law of DMU is not applicable in free goods and services. True or false

• False

• True

• Sometimes true sometimes false

• Cannot be defined

MU curve-

• Slopes downward from left to right

• Moves upward from left to right

• First increases then decreases and then becomes negative

• None of the above