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Difficulty: Very hardConcepts of Utility (Total, Average, and Marginal Utility)

Match each utility condition or stage of consumption on the left with its corresponding mathematical and economic relationship on the right.

  • Point of Satiety (Consumer Saturation)Marginal Utility is zero (MU=0\text{MU} = 0) while Total Utility (TU\text{TU}) reaches its maximum peak.
  • Stage where Total Utility (TU\text{TU}) increases at a diminishing rateMarginal Utility is positive (MU>0\text{MU} > 0) but steadily decreasing.
  • Onset of Disutility (Negative Marginal Utility region)Total Utility (TU\text{TU}) begins to decline as additional consumption reduces overall satisfaction (ΔTUΔQ<0\frac{\Delta \text{TU}}{\Delta Q} < 0).
  • Point of Maximum Average Utility (AU\text{AU})Marginal Utility equals Average Utility (MU=AU\text{MU} = \text{AU}) at the peak of the Average Utility curve.

Answer

Point of Satiety matches with zero Marginal Utility and peak Total Utility (MU=0\text{MU} = 0); Total Utility increasing at a diminishing rate matches positive but declining Marginal Utility (MU>0\text{MU} > 0); Onset of Disutility matches declining Total Utility (MU<0\text{MU} < 0); and Maximum Average Utility matches the intersection where Marginal Utility equals Average Utility (MU=AU\text{MU} = \text{AU}).
Each pair correctly reflects the calculus and economic relationships governing utility curves. At satiety, TU\text{TU} reaches its maximum peak while MU=0\text{MU} = 0. When TU\text{TU} grows at a diminishing rate, MU\text{MU} is positive but decreasing. When consumption brings disutility (MU<0\text{MU} < 0), TU\text{TU} drops. Finally, the mathematical identity between average and marginal variables dictates that average utility is maximized where MU=AU\text{MU} = \text{AU}.

Step-by-Step Solution

1
Analyze the derivative relationship between Total Utility (TU\text{TU}) and Marginal Utility (MU\text{MU}).
Marginal Utility is the first derivative of Total Utility with respect to quantity (MU=dTUdQ\text{MU} = \frac{d\text{TU}}{dQ}).
Understanding MU\text{MU} as the slope of the TU\text{TU} curve allows exact matching of critical points like maxima and inflection points.
2
Identify the point of satiety.
When TU\text{TU} reaches its maximum, its slope is zero (MU=0\text{MU} = 0).
Point of satiety defines complete satisfaction where no more utility can be added.
3
Analyze the diminished growth of TU\text{TU} and negative MU\text{MU}.
Diminishing TU\text{TU} growth implies MU>0\text{MU} > 0 but declining. Once MU<0\text{MU} < 0, TU\text{TU} begins falling.
This reflects the fundamental Law of Diminishing Marginal Utility.
4
Examine the relationship between Average Utility (AU\text{AU}) and Marginal Utility (MU\text{MU}).
AU\text{AU} reaches its maximum where MU=AU\text{MU} = \text{AU}.
When marginal value equals average value, the average value is stationary at its peak.

Key Concept

Interrelationships among Total, Average, and Marginal Utility concepts
Estimated Time:1m 0s
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Topics

Concepts of Utility (Total, Average, and Marginal Utility)

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