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A consumer's total utility from 3 units of a good is 45 utils and from 4 units is 50 utils. The marginal utility of the 4th unit is:
A11 utils
B50 utils
C95 utils
D5 utils
Answer & Solution
Correct answer: D. 5 utils
1. Marginal utility of the $n^{th}$ unit is $MU_n = TU_n - TU_{n-1}$.
2. Here $MU_4 = TU_4 - TU_3 = 50 - 45 = 5$ utils.
3. 11 is the MU of the 3rd unit, 50 is the total utility, and 95 is the sum of the two TU values, so all are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.4_
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