When marginal utility is negative, it means that consuming an additional unit of a good or service leads to a reduction in overall satisfaction or utility. Marginal utility is the change in total utility resulting from consuming one more unit.
Here are the key concepts to understand:
1. Total Utility: This is the total satisfaction or benefit derived from consuming a certain quantity of goods or services.
2. Marginal Utility: This is the additional satisfaction or benefit derived from consuming one more unit of the good or service.
Given that marginal utility is negative:
- Marginal Utility Negative: When the additional unit consumed decreases the total utility, it indicates that the more of the product is consumed, the less satisfying it becomes, and it even detracts from overall satisfaction.
As a result, the total utility starts to decrease because each additional unit consumed is making the consumer worse off rather than better off.
Therefore, when marginal utility is negative, total utility is:
- Falling.
This is because the negative marginal utility implies that the additional consumption does not enhance overall satisfaction but instead reduces it. Hence, the correct answer is:
falling.
