Utility Theory: Total Utility, Marginal Utility, Diminishing Marginal Utility, Equi-Marginal Principle, Consumer Equilibrium

1. A rational consumer spends all income on two goods, X and Y. The price of X is $4 and the price of Y is $2. At the current combination, MUX = 40 and MUY = 30. What should the consumer do to increase total utility?

A buy more X and less Y
B buy more Y and less X
C keep consumption unchanged
D buy less of both goods

2. A consumer maximises utility when

A total utility from each good is equal
B marginal utility from each good is equal
C marginal utility per dollar spent is equal for all goods
D price per unit is equal for all goods

3. A consumer buys only good X. The total utility from consuming 1, 2, 3 and 4 units is 20, 38, 51 and 58. What is the marginal utility of the fourth unit?

A 7
B 13
C 18
D 58

4. Total utility is maximised when

A marginal utility is at its highest
B marginal utility is zero
C average utility is zero
D price is zero

5. If marginal utility becomes negative, total utility

A rises at an increasing rate
B rises at a decreasing rate
C remains constant
D falls

6. A consumer’s total utility from consuming units of a good is shown.

Units: 0, 1, 2, 3, 4, 5
Total utility: 0, 18, 33, 45, 54, 60

Which statement is correct?

A marginal utility is increasing
B marginal utility is constant
C marginal utility is diminishing
D total utility is falling

7. A consumer has $12 to spend on X and Y. PX = $3 and PY = $2.

Marginal utility schedule:

Units of X: 1, 2, 3, 4
MUX: 30, 24, 15, 9

Units of Y: 1, 2, 3, 4, 5, 6
MUY: 20, 18, 16, 14, 10, 6

Which combination maximises utility?

A 2X and 3Y
B 2X and 4Y
C 3X and 1Y
D 4X and 0Y

8. The equi-marginal principle assumes that a rational consumer

A equalises total utility from each product
B equalises marginal utility per unit of money spent
C spends more on goods with lower marginal utility per dollar
D ignores prices when choosing goods

9. If MUX/PX is greater than MUY/PY, the consumer should

A buy more X and less Y
B buy more Y and less X
C buy less X and less Y
D stop buying both goods

10. If the price of X rises while MUX and MUY initially remain unchanged, then

A MUX/PX rises and the consumer buys more X
B MUX/PX falls and the consumer may switch away from X
C MUY/PY falls and the consumer buys less Y
D total utility from X must rise

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

11. A consumer spends all income on X and Y. PX = $5, PY = $10, MUX = 25 and MUY = 60. Which statement is correct?

A the consumer is in equilibrium
B the consumer should buy more X
C the consumer should buy more Y
D the consumer should buy no Y

12. Which situation best shows diminishing marginal utility?

A each extra unit consumed adds more utility than the previous unit
B each extra unit consumed adds less utility than the previous unit
C total utility falls from the first unit consumed
D price falls as consumption rises

13. A consumer buys 5 units of a good. Total utility is 100. The marginal utility of the fifth unit is 8. What was total utility from 4 units?

A 8
B 92
C 100
D 108

14. A consumer’s total utility is maximised at 6 units. Which must be true at the 6th unit?

A marginal utility is negative
B marginal utility is zero
C marginal utility is equal to price
D average utility is maximum

15. If marginal utility is positive but falling, total utility is

A falling at an increasing rate
B falling at a decreasing rate
C rising at an increasing rate
D rising at a decreasing rate

16. The total utility from 1, 2, 3, 4 and 5 units is 12, 23, 33, 42 and 50. Which unit has the lowest marginal utility?

A second
B third
C fourth
D fifth

17. A consumer spends $20 on goods A and B. PA = $5 and PB = $4.

Units of A: 1, 2, 3, 4
MUA: 50, 40, 25, 15

Units of B: 1, 2, 3, 4, 5
MUB: 44, 36, 28, 20, 12

Which bundle gives the highest utility?

A 4A and 0B
B 3A and 1B
C 2A and 2B
D 0A and 5B

18. A consumer currently buys two goods. For the last unit of each good, MUX = 36, PX = $6, MUY = 32, PY = $4. What should the consumer do?

A buy more X because MUX is higher
B buy more Y because MUY/PY is higher
C buy more X because PX is higher
D remain unchanged because both marginal utilities are positive

19. Which is the best interpretation of marginal utility?

A total satisfaction from all units consumed
B additional satisfaction from one extra unit consumed
C satisfaction per dollar from all income spent
D price paid for the last unit consumed

20. The law of diminishing marginal utility helps explain why

A demand curves usually slope downwards
B supply curves usually slope upwards
C public goods are non-excludable
D firms maximise profit where MR = MC

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

21. A consumer has $9. PX = $3 and PY = $3.

Units: 1, 2, 3
MUX: 21, 18, 12
MUY: 24, 15, 9

Which combination maximises utility?

A 3X and 0Y
B 2X and 1Y
C 1X and 2Y
D 0X and 3Y

22. A rational consumer chooses the good with the highest

A total utility
B marginal utility
C marginal utility per dollar
D price

23. A consumer moves from 2 units to 3 units of a good. Total utility rises from 70 to 84. What is marginal utility?

A 14
B 28
C 70
D 84

24. If the marginal utility of money is assumed constant, the consumer’s demand price for a good depends on

A marginal utility of the good
B average utility of the good only
C total utility of all goods consumed
D producer surplus

25. Which statement is correct?

A diminishing marginal utility means total utility must fall
B diminishing marginal utility means total utility rises by smaller additions while MU remains positive
C diminishing marginal utility means price must fall
D diminishing marginal utility means income must rise

26. A consumer buys X and Y. PX = $8 and PY = $4. At the chosen bundle, MUX = 64 and MUY = 28. What is the correct adjustment?

A buy more X because 64 > 28
B buy more Y because 28/4 > 64/8
C buy more X because 64/8 > 28/4
D no change because both marginal utilities are positive

27. A consumer has $16. PX = $4, PY = $2.

Units of X: 1, 2, 3, 4
MUX: 36, 32, 20, 12

Units of Y: 1, 2, 3, 4, 5, 6, 7, 8
MUY: 18, 16, 15, 13, 11, 9, 7, 5

Which combination maximises total utility?

A 4X and 0Y
B 3X and 2Y
C 2X and 4Y
D 1X and 6Y

28. Which case violates the usual assumption of diminishing marginal utility?

A TU: 10, 18, 24, 28
B TU: 5, 12, 20, 31
C TU: 20, 35, 45, 50
D TU: 8, 15, 21, 26

29. A consumer obtains marginal utilities of 30, 24, 18, 12 and 6 from successive units of a good. If the price per unit is $6 and the marginal utility of money is 3 utils per dollar, how many units will the consumer buy?

A 2
B 3
C 4
D 5

30. If price equals marginal utility divided by marginal utility of money, then a fall in marginal utility of a good, other things equal, causes

A the maximum price the consumer is willing to pay to fall
B the maximum price the consumer is willing to pay to rise
C the marginal utility of money to become zero
D total utility to become negative immediately

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

31. A consumer has $15. PX = $5, PY = $5.

Units: 1, 2, 3
MUX: 45, 35, 20
MUY: 40, 30, 25

Which bundle maximises utility?

A 3X and 0Y
B 2X and 1Y
C 1X and 2Y
D 0X and 3Y

32. A consumer is in equilibrium buying X and Y. PX = $6, PY = $3 and MUY = 24. What must MUX be?

A 12
B 24
C 36
D 48

33. A consumer is initially in equilibrium. The marginal utility of X falls due to a change in taste, while prices and income stay constant. What is the most likely response?

A buy more X and less Y
B buy less X and more Y
C buy the same amount of both
D buy less of both and leave income unspent

34. Which is true when marginal utility is above average utility?

A average utility rises
B average utility falls
C total utility is maximised
D marginal utility must be negative

35. A good gives total utility of 15, 29, 42, 54, 65 and 75 for 1 to 6 units. Which statement is correct?

A marginal utility is constant
B marginal utility falls by exactly 1 each unit
C marginal utility is diminishing
D total utility is diminishing

36. A consumer has income of $10. PX = $2 and PY = $1.

Units of X: 1, 2, 3, 4, 5
MUX: 20, 16, 14, 10, 6

Units of Y: 1, 2, 3, 4, 5, 6
MUY: 11, 10, 9, 8, 7, 6

Which bundle maximises utility?

A 5X and 0Y
B 4X and 2Y
C 3X and 4Y
D 2X and 6Y

37. If a consumer spends all income and MUX/PX = MUY/PY = MUZ/PZ, then

A total utility from X, Y and Z must be equal
B the consumer cannot improve utility by reallocating expenditure
C all goods must have the same price
D all marginal utilities must be equal

38. A consumer buys good X until marginal utility equals zero, despite a positive price. What is the most likely problem with this decision?

A the consumer has ignored the opportunity cost of spending money on X
B the consumer has maximised utility correctly
C the consumer has achieved the equi-marginal condition automatically
D the consumer must be buying an inferior good

39. A consumer’s marginal utility from a good is 48 utils. The marginal utility of money is 4 utils per dollar. What is the maximum price the consumer is willing to pay for that unit?

A $4
B $8
C $12
D $48

40. If the marginal utility of a good is 60 utils and its price is $10, while marginal utility of money is 5 utils per dollar, what should the consumer do?

A buy the unit because MU/P is greater than MU of money
B not buy the unit because MU/P is less than MU of money
C be indifferent because MU/P equals MU of money
D buy only if total utility is falling

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

41. A consumer’s total utility from a good reaches a maximum at the fourth unit. Which marginal utility sequence is consistent with this?

A 20, 15, 8, 0, -5
B 20, 15, 8, 3, 1
C 20, 25, 30, 35, 40
D -2, -4, -6, -8, -10

42. Which assumption is most necessary for utility maximisation theory?

A consumers have unlimited income
B consumers are rational and aim to maximise satisfaction
C goods have no prices
D marginal utility always rises

43. A consumer has $24. PX = $6, PY = $3.

Units of X: 1, 2, 3, 4
MUX: 72, 48, 30, 18

Units of Y: 1, 2, 3, 4, 5, 6, 7, 8
MUY: 33, 30, 24, 21, 18, 15, 12, 9

Which combination maximises utility?

A 4X and 0Y
B 3X and 2Y
C 2X and 4Y
D 1X and 6Y

44. A consumer maximises utility when consuming 4 units of X and 6 units of Y. PX = $3 and PY = $2. If MUX at the 4th unit is 18, what is MUY at the 6th unit?

A 6
B 9
C 12
D 27

45. Which statement about total utility and marginal utility is correct?

A total utility is the change in marginal utility
B marginal utility is the change in total utility
C total utility must always fall when marginal utility falls
D marginal utility must always be greater than total utility

46. A consumer’s marginal utilities from units of X are 40, 34, 28, 22, 16 and 10. Price of X is $4. The marginal utility of money is 5 utils per dollar. How many units should be bought?

A 3
B 4
C 5
D 6

47. A consumer with fixed income buys only X and Y. At the current bundle, MUX/PX = 10 and MUY/PY = 6. After reallocating spending rationally, what will tend to happen?

A MUX/PX will fall and MUY/PY will rise
B MUX/PX will rise and MUY/PY will fall
C both ratios will rise indefinitely
D both ratios must become zero

48. The marginal utility from consuming successive cups of coffee is 18, 12, 5, 0 and -4. Which statement is correct?

A total utility is highest after the third cup
B total utility is highest after the fourth cup
C total utility is highest after the fifth cup
D total utility is falling from the first cup

49. Which situation is most likely to make the equi-marginal condition impossible to satisfy exactly?

A goods are only available in whole units
B prices are positive
C consumers have limited income
D marginal utility diminishes

50. A consumer has $18. PX = $6 and PY = $3.

Units of X: 1, 2, 3
MUX: 78, 42, 24

Units of Y: 1, 2, 3, 4, 5, 6
MUY: 36, 33, 27, 21, 15, 9

Which bundle maximises utility?

A 3X and 0Y
B 2X and 2Y
C 1X and 4Y
D 0X and 6Y

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

1. Answer: B

A wrong: MUX/PX = 40/4 = 10, which is lower than MUY/PY.
B correct: MUY/PY = 30/2 = 15, so Y gives more extra utility per dollar. Buy more Y and less X.
C wrong: the consumer is not in equilibrium because the marginal utility per dollar is unequal.
D wrong: buying less of both would leave income unspent and reduce total utility.

2. Answer: C

A wrong: total utility from each good does not need to be equal.
B wrong: marginal utility alone is not enough because prices differ.
C correct: utility is maximised when MU/P is equal for all goods.
D wrong: goods do not need equal prices.

3. Answer: A

A correct: MU of 4th unit = TU4 – TU3 = 58 – 51 = 7.
B wrong: 13 is MU of the 3rd unit.
C wrong: 18 is MU of the 2nd unit.
D wrong: 58 is total utility, not marginal utility.

4. Answer: B

A wrong: when MU is highest, TU is rising fastest, not maximised.
B correct: total utility is maximised when marginal utility becomes zero.
C wrong: average utility being zero is not the rule.
D wrong: price being zero is irrelevant to total utility maximum.

5. Answer: D

A wrong: TU rises at increasing rate when MU rises.
B wrong: TU rises at decreasing rate when MU is positive but falling.
C wrong: TU is constant when MU is zero.
D correct: negative MU means each extra unit reduces total utility.

6. Answer: C

A wrong: MU values are 18, 15, 12, 9, 6, so they are not increasing.
B wrong: MU is not constant.
C correct: each extra unit adds less utility than the previous unit.
D wrong: TU is rising, just at a slower rate.

7. Answer: A

A correct: 2X and 3Y costs 2($3) + 3($2) = $12 and gives TU = 54 + 54 = 108, the highest among valid options.
B wrong: 2X and 4Y costs $14, above the budget.
C wrong: 3X and 1Y gives TU = 69 + 20 = 89, lower.
D wrong: 4X and 0Y gives TU = 78, lower.

8. Answer: B

A wrong: total utility from each product does not need equality.
B correct: the equi-marginal principle equalises marginal utility per unit of money spent.
C wrong: consumers shift away from lower MU per dollar.
D wrong: prices matter because MU must be compared relative to price.

9. Answer: A

A correct: X gives more marginal utility per dollar, so the consumer should buy more X and less Y.
B wrong: Y gives lower marginal utility per dollar.
C wrong: reducing both leaves income unspent.
D wrong: stopping both would reduce utility.

10. Answer: B

A wrong: if PX rises, MUX/PX falls, not rises.
B correct: X becomes less attractive per dollar, so the consumer may switch away from X.
C wrong: PY has not changed, so MUY/PY does not directly fall.
D wrong: total utility from X does not have to rise.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

11. Answer: C

A wrong: MUX/PX = 25/5 = 5, while MUY/PY = 60/10 = 6, so not equilibrium.
B wrong: X gives lower utility per dollar.
C correct: Y gives higher marginal utility per dollar, so buy more Y.
D wrong: Y is actually more worthwhile at the margin.

12. Answer: B

A wrong: that is increasing marginal utility.
B correct: diminishing marginal utility means each extra unit adds less satisfaction.
C wrong: TU does not need to fall from the first unit.
D wrong: price falling is not the definition.

13. Answer: B

A wrong: 8 is marginal utility of the fifth unit.
B correct: TU4 = TU5 – MU5 = 100 – 8 = 92.
C wrong: 100 is total utility from 5 units.
D wrong: 108 adds MU instead of subtracting it.

14. Answer: B

A wrong: negative MU means TU has already started falling.
B correct: total utility is maximised where marginal utility is zero.
C wrong: MU = price is not the total utility maximum rule.
D wrong: average utility need not be maximum.

15. Answer: D

A wrong: TU falls only when MU is negative.
B wrong: TU is not falling.
C wrong: TU rises at an increasing rate when MU rises.
D correct: positive but falling MU means TU rises, but by smaller additions.

16. Answer: D

A wrong: MU2 = 23 – 12 = 11.
B wrong: MU3 = 33 – 23 = 10.
C wrong: MU4 = 42 – 33 = 9.
D correct: MU5 = 50 – 42 = 8, the lowest.

17. Answer: C

A wrong: 4A and 0B gives TU = 130.
B wrong: 3A and 1B gives TU = 115 + 44 = 159.
C correct: 2A and 2B gives TU = 90 + 80 = 170, the highest among options.
D wrong: 0A and 5B gives TU = 140.

18. Answer: B

A wrong: marginal utility alone is not enough; price matters.
B correct: MUX/PX = 36/6 = 6, while MUY/PY = 32/4 = 8, so buy more Y.
C wrong: higher price does not make X more attractive.
D wrong: positive MU does not prove equilibrium.

19. Answer: B

A wrong: this is total utility.
B correct: marginal utility is additional satisfaction from one extra unit.
C wrong: this is closer to marginal utility per dollar.
D wrong: price is not utility.

20. Answer: A

A correct: as more is consumed, MU falls, so consumers are willing to pay less for extra units, helping explain downward-sloping demand.
B wrong: supply depends on production costs and profit incentives.
C wrong: public goods are about non-rivalry and non-excludability.
D wrong: MR = MC is profit maximisation.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

21. Answer: B

A wrong: 3X gives TU = 21 + 18 + 12 = 51.
B correct: 2X and 1Y gives TU = 21 + 18 + 24 = 63, the highest.
C wrong: 1X and 2Y gives TU = 21 + 24 + 15 = 60.
D wrong: 3Y gives TU = 24 + 15 + 9 = 48.

22. Answer: C

A wrong: total utility ignores the value of the next dollar spent.
B wrong: marginal utility alone ignores price.
C correct: rational consumers compare marginal utility per dollar.
D wrong: higher price is not a reason to buy.

23. Answer: A

A correct: MU = 84 – 70 = 14.
B wrong: 28 is not the change in TU.
C wrong: 70 is initial total utility.
D wrong: 84 is new total utility.

24. Answer: A

A correct: if MU of money is constant, willingness to pay depends on the good’s marginal utility.
B wrong: average utility does not determine demand price.
C wrong: total utility from all goods is too broad.
D wrong: producer surplus is irrelevant to consumer demand price.

25. Answer: B

A wrong: TU falls only when MU becomes negative.
B correct: when MU is positive but diminishing, TU rises by smaller additions.
C wrong: price does not have to fall.
D wrong: income does not have to rise.

26. Answer: C

A wrong: compare MU per dollar, not absolute MU.
B wrong: 28/4 = 7, while 64/8 = 8, so Y is lower.
C correct: X gives 8 utils per dollar and Y gives 7, so buy more X.
D wrong: positive MU does not mean equilibrium.

27. Answer: C

A wrong: 4X gives TU = 100.
B wrong: 3X and 2Y gives TU = 88 + 34 = 122.
C correct: 2X and 4Y gives TU = 68 + 62 = 130, the highest.
D wrong: 1X and 6Y gives TU = 36 + 82 = 118.

28. Answer: B

A wrong: MU values are 10, 8, 6, 4, so diminishing MU holds.
B correct: MU values are 5, 7, 8, 11, so marginal utility rises.
C wrong: MU values are 20, 15, 10, 5, so diminishing MU holds.
D wrong: MU values are 8, 7, 6, 5, so diminishing MU holds.

29. Answer: B

A wrong: the second unit still gives MU above the price-equivalent utility.
B correct: price $6 × MU of money 3 = 18 utils. The consumer buys up to the 3rd unit, where MU = 18.
C wrong: the 4th unit gives only 12 utils, below the cost in utility terms.
D wrong: the 5th unit gives only 6 utils.

30. Answer: A

A correct: demand price = MU / MU of money, so lower MU reduces willingness to pay.
B wrong: willingness to pay falls, not rises.
C wrong: MU of money does not become zero.
D wrong: total utility does not immediately become negative.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

31. Answer: B

A wrong: 3X gives TU = 100.
B correct: 2X and 1Y gives TU = 80 + 40 = 120, the highest.
C wrong: 1X and 2Y gives TU = 45 + 70 = 115.
D wrong: 3Y gives TU = 95.

32. Answer: D

A wrong: 12 gives MUX/PX = 2, not equal to MUY/PY.
B wrong: 24 gives MUX/PX = 4.
C wrong: 36 gives MUX/PX = 6.
D correct: MUY/PY = 24/3 = 8, so MUX/6 = 8 and MUX = 48.

33. Answer: B

A wrong: lower marginal utility from X makes X less attractive.
B correct: the consumer should buy less X and more Y to restore MU/P equality.
C wrong: the original bundle is no longer utility-maximising.
D wrong: rational consumers normally spend all income if goods provide positive utility.

34. Answer: A

A correct: when marginal utility is above average utility, it pulls average utility upward.
B wrong: average utility falls when marginal utility is below average utility.
C wrong: total utility maximum occurs when MU = 0.
D wrong: MU can be positive and above average.

35. Answer: C

A wrong: MU values are 15, 14, 13, 12, 11, 10, not constant.
B wrong: MU does fall by 1 each unit, but the stronger correct statement is diminishing MU.
C correct: each additional unit adds less extra utility than the previous unit.
D wrong: total utility is rising, not diminishing.

36. Answer: C

A wrong: 5X gives TU = 66.
B wrong: 4X and 2Y gives TU = 60 + 21 = 81.
C correct: 3X and 4Y gives TU = 50 + 38 = 88, the highest.
D wrong: 2X and 6Y gives TU = 36 + 51 = 87.

37. Answer: B

A wrong: total utility from each good does not have to be equal.
B correct: equal MU/P across goods means no reallocation can increase total utility.
C wrong: prices can differ.
D wrong: marginal utilities can differ if prices differ.

38. Answer: A

A correct: if price is positive, buying until MU = 0 ignores that money could have been spent on other goods.
B wrong: this maximises TU from X alone, not total utility from all spending.
C wrong: equi-marginal condition requires MU/P equality across goods.
D wrong: inferior goods are about income elasticity, not this issue.

39. Answer: C

A wrong: $4 is the marginal utility of money, not willingness to pay.
B wrong: $8 is too low.
C correct: demand price = MU / MU of money = 48/4 = $12.
D wrong: $48 is utility, not price.

40. Answer: A

A correct: MU/P = 60/10 = 6 utils per dollar, greater than MU of money = 5, so the unit is worth buying.
B wrong: MU/P is greater, not less.
C wrong: equality would mean indifference, but 6 ≠ 5.
D wrong: total utility falling would mean negative MU, not the case here.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

41. Answer: A

A correct: TU rises until the 4th unit where MU = 0, then falls when MU becomes negative.
B wrong: MU is still positive at the 4th and 5th units, so TU continues rising.
C wrong: MU is increasing, so TU rises faster.
D wrong: MU is negative throughout, so TU falls from the start.

42. Answer: B

A wrong: consumers have limited income.
B correct: the theory assumes rational consumers aim to maximise satisfaction.
C wrong: prices are essential to the equi-marginal condition.
D wrong: marginal utility usually diminishes.

43. Answer: C

A wrong: 4X gives TU = 168.
B wrong: 3X and 2Y gives TU = 150 + 63 = 213.
C correct: 2X and 4Y gives TU = 120 + 108 = 228, the highest.
D wrong: 1X and 6Y gives TU = 72 + 141 = 213.

44. Answer: C

A wrong: MUY = 6 would give MUY/PY = 3, not equal to MUX/PX.
B wrong: MUY = 9 gives 4.5 per dollar.
C correct: MUX/PX = 18/3 = 6, so MUY/2 = 6 and MUY = 12.
D wrong: MUY = 27 gives 13.5 per dollar.

45. Answer: B

A wrong: marginal utility is not the base for total utility change.
B correct: marginal utility is the change in total utility from one extra unit.
C wrong: total utility can rise while marginal utility falls, as long as MU is positive.
D wrong: marginal utility is not always greater than total utility.

46. Answer: B

A wrong: the 4th unit is still worth buying.
B correct: price $4 × MU of money 5 = 20 utils. Buy units with MU at least 20: 40, 34, 28, 22, so 4 units.
C wrong: the 5th unit gives only 16 utils, below its utility cost.
D wrong: the 6th unit gives only 10 utils.

47. Answer: A

A correct: buying more X lowers MUX/PX due to diminishing MU; buying less Y raises MUY/PY.
B wrong: this reverses the adjustment.
C wrong: both ratios cannot rise indefinitely.
D wrong: equilibrium does not require ratios to become zero.

48. Answer: B

A wrong: after the third cup TU is high, but the fourth cup adds zero and leaves TU at its maximum.
B correct: total utility is highest when marginal utility reaches zero, at the fourth cup.
C wrong: the fifth cup has negative MU, so TU falls.
D wrong: TU rises while MU is positive.

49. Answer: A

A correct: indivisibility means exact MU/P equality may not be possible.
B wrong: positive prices are normal in the model.
C wrong: limited income is assumed in consumer theory.
D wrong: diminishing MU helps create equilibrium.

50. Answer: C

A wrong: 3X gives TU = 144.
B wrong: 2X and 2Y gives TU = 120 + 69 = 189.
C correct: 1X and 4Y gives TU = 78 + 117 = 195, the highest.
D wrong: 6Y gives TU = 141.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.