alleryWhen the marginal utility of a good becomes negative, total utility derived from the good will:
Astay constant
Breach its maximum
Crise at a faster rate
Dbegin to decline
Answer & Solution
Correct answer: D. begin to decline
1. MU is the rate of change of total utility.
2. When MU turns negative, each extra unit reduces total utility, so TU begins to decline.
3. TU is maximum only when MU is zero, and it does not stay constant or rise faster, so those options are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.5_
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