The statement that "as more of a good is consumed, its extra benefit declines" refers to
A. the law of diminishing marginal product.
B. the law of diminishing marginal utility.
C. the law of demand.
D. the law of comparative advantage.
Answer: B
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The CPI measures the average prices paid by __________ for _________
A. urban consumers; a fixed basket of consumption goods and services B. urban consumers; the average basket of goods and services they buy C. all consumers; housing, transportation, and food D. everyone who earns an income; the necessities of life
If a good is price inelastic, a decrease in price will:
A) decrease total revenue. B) increase total revenue. C) not affect income. D) none of the above.
If a firm hires labor for $20,000, pays rent of $12,000, buys raw materials for $6,000 from another firm, earns profits of $3,000, and sells its output for $41,000, the value added by the firm is _____
a. $0 b. $15,000 c. $35,000 d. $38,000 e. $41,000
What is the first round effect on the components of aggregate demand, if the government increases spending (assume fixed exchange rates and financing through the real credit market)?
a. Aggregate demand increases and net exports decrease. b. Aggregate demand and net exports do not change c. Aggregate demand decreases and net exports increases. d. Aggregate demand and net exports increase. e. Aggregate demand and net exports decrease.