The law of diminishing marginal utility states that:
A. total utility is maximized when consumers obtain the same amount of utility per unit of each
product consumed.
B. beyond some point, additional units of a product will yield less and less extra satisfaction to
a consumer.
C. price must be lowered to induce firms to supply more of a product.
D. it will take larger and larger amounts of resources beyond some point to produce
Answer: B
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What will be an ideal response?
When Sardar buys insurance, on net he
A) gains if the value of the insurance is greater than the price he pays the insurance company. B) loses because the price must pay the insurance company lowers his expected utility. C) gains because his actual wealth with the insurance is greater than his expected wealth without the insurance. D) loses if the price of the insurance equals his expected loss from a bad outcome.
Ration coupons are often associated with price ceilings because they
a. substitute for dollars in the purchase of goods b. restore prices to equilibrium c. compensate for the producers' lost opportunities d. are used to allocate goods under conditions of excess demand e. enable producers to produce beyond equilibrium levels without suffering the consequences of lowering prices
In the open-economy macroeconomic model, if a country's interest rate rises, its net capital outflow
a. rises and the real exchange rate rises. b. falls and the real exchange rate falls. c. rises and the real exchange rate falls. d. falls and the real exchange rate rises.