Which statement about utility is accurate?

• A. Utility is the same for all consumers regardless of their preferences.
• B. Utility decreases as more of a good is consumed, according to the law of increasing marginal utility.
• C. Utility is always measured in monetary terms.
• D. Utility measures the satisfaction or happiness a consumer derives from consuming goods and services.

Answer: (D)

Verified step by step guidance

1. Understand the concept of utility in microeconomics: Utility represents the satisfaction or happiness a consumer gains from consuming goods and services.
2. Recognize that utility is subjective and varies between consumers based on their individual preferences, so it is not the same for all consumers.
3. Recall the law of diminishing marginal utility, which states that as a consumer consumes more units of a good, the additional satisfaction (marginal utility) from each extra unit typically decreases, not increases.
4. Note that utility is a theoretical construct and is not directly measured in monetary terms; instead, it is a measure of satisfaction or happiness.
5. Conclude that the accurate statement is that utility measures the satisfaction or happiness a consumer derives from consuming goods and services.