Observe the given table and answer the questions :Unit of commodityTotal UtilityMarginal Utility110____21883____64284530____63007____–2Questions :(a) Complete the above table. (2)(b) When total utility increases at a diminishing rate then marginal ut…

Answer: (a) MU of 1st unit = 10, TU of 3rd unit = 24, MU of 5th unit = 2, TU of 7th unit = 28; (b) diminishing; (c) negative.

(a) \(MU_n = TU_n - TU_{n-1}\) and \(TU_n = TU_{n-1} + MU_n\). MU of 1st unit = 10 − 0 = 10; TU of 3rd unit = 18 + 6 = 24; MU of 5th unit = 30 − 28 = 2; TU of 7th unit = 30 + (−2) = 28.

(b) When TU increases at a diminishing rate, MU goes on diminishing (but remains positive).

(c) After six units (the point of satiety, where TU is maximum and MU is zero), MU becomes negative (−2 for the 7th unit) and TU starts falling from 30 to 28. Note that at the sixth unit itself MU is zero; it is beyond six units that MU becomes negative.