University of Central Florida (UCF) ECO2023 Principles of Microeconomics Final Practice Exam

When total utility increases with additional consumption of a good, it indicates that the consumer is deriving additional satisfaction from consuming more of that good. This additional satisfaction is referred to as marginal utility, which measures the change in total utility resulting from consuming an additional unit.

In this context, marginal utility must be positive while additional units are consumed because the total utility is increasing. However, as consumption continues, the principle of diminishing marginal utility often comes into play. This principle suggests that while the consumer may still receive additional satisfaction from each extra unit consumed, the amount of satisfaction gained from each successive unit may decrease, leading to a situation where marginal utility is still positive but potentially decreasing.

Therefore, it is correct to assert that marginal utility can be positive, but it could either be increasing (if each unit gives more satisfaction than the last) or decreasing (if each unit gives less satisfaction than the last). This aligns well with the general behavior observed in consumer choice and utility theory.