Q.Elasticity of demand is equal to one indicates :

Step 1 — Link between TU and MU

Marginal utility is the change in total utility from consuming one more unit:

So MU is the slope (rate of change) of the total utility curve.

Step 2 — Interpret "increasing at a decreasing rate"

• Total utility is still increasing → each extra unit adds something → MU is positive.
• But the rate of increase is slowing → each extra unit adds less than before → MU is decreasing.

Hence MU is positive and falling — exactly (B). This is the law of diminishing marginal utility in action.

Step 3 — Reject the others

• (A) MU = TU — only true for the very first unit, not generally.
• (C) MU negative — happens only when TU actually falls. …