What is meant by positive marginal utility?

Prepare for the Economic Principles Test. Study with interactive questions and detailed explanations on each topic. Boost your understanding and confidence to ace your exam!

Positive marginal utility refers to the increase in total utility that results from consuming an additional unit of a good or service. When an individual experiences positive marginal utility, it means that their satisfaction or pleasure from consumption grows with each additional unit consumed, at least up to a certain point. This concept is foundational in understanding consumer behavior and decision-making, as it illustrates how consumers derive benefit from products and how these benefits influence their consumption choices.

In the context of the other options, total utility decreasing with additional consumption would indicate negative marginal utility, which contradicts the concept of positive marginal utility. Price elasticity of demand relates to consumer responsiveness to price changes rather than directly to utility changes. Lastly, categorizing a good as inferior pertains to consumer income effects rather than directly to the utility derived from additional consumption of a good. Thus, the choice reflecting that the consumption of an additional item increases total utility directly aligns with the definition of positive marginal utility.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy