2019 · Q22
Which one of the following statements is not correct?
General KnowledgeIndian Economy
- AWhen total utility is maximum, marginal utility is zero.
- BWhen total utility is decreasing, marginal utility is negative.
- CWhen total utility is increasing, marginal utility is positive.
- DWhen total utility is maximum, marginal and average utility are equal to each other.
Explanation
Marginal utility is the change in total utility from consuming one more unit. When total utility is at its maximum, the marginal utility of the last unit is zero; when total utility is falling, marginal utility is negative; and when total utility is rising, marginal utility is positive. At the point of maximum total utility, marginal utility is zero while average utility is positive, so the two are not equal to each other. Statements A, B and C are correct descriptions. Hence option D is the incorrect statement.