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Question
State the following statement is True or False:
MU and TU are equal at the initial stage.
Options
True
False
Solution
MU and TU are equal at the initial stage. -True
Explanation: Total utility TU refers to the aggregate utility, or the summation of utility, derived from the consumption of all the units of a commodity. Algebraically, TUn = MU1 + MU2 + MU3 +.............. + MUn = ∑MU At the initial stage i.e. at the first unit of consumption, Marginal Utility MU and Total Utility TU are equal. That is, MU = TU.
| Number of Units Consumed of Commodity (X) | Total Utility (TU) (utils) | Marginal Utility (MU) MUn = TUn − TUn − 1 (utils) |
| 1 | 50* | 50 − 0 = 50* |
| 2 | 100 | 100 − 50 = 50 |
| 3 | 130 | 130 − 100 = 30 |
* TU and MU are equal at the initial phase.
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