Question

6. Paul Mabaso’s average utility from the consumption of 8 chocolates is 25 utils per slab. If the marginal utility of the 9th slab is 20 utils, will his average utility increase, decrease or stay constant if he consumes 9 slabs? Explain. What will happen to his total utility? (4)

Answer 1

As marginal utility decreases with the increase in consumption, then the average utility will decrease too, but the total utility will increase.