Explanation:

- Total Utility (TU) increases at a diminishing rate when each additional unit of consumption adds less and less satisfaction.

- Marginal Utility (MU) is the addition to total utility from consuming one more unit of a good or service.

- When TU is increasing at a diminishing rate, it means the additional satisfaction from each extra unit is decreasing.

- Option 1: Increasing - If MU was increasing, TU would increase at an increasing rate, not diminishing.

- Option 2: Decreasing - Correct. MU decreases because each additional unit adds less to TU.

- Option 3: Constant - If MU were constant, TU would increase at a constant rate.

- Option 4: Negative - If MU were negative, TU would decrease.