What do we know about total utility when marginal utility is zero?
What will be an ideal response?
Marginal utility is the extra utility from consuming another unit of a good. If marginal utility is 0, total utility does not increase further when the consumer consumes the next unit, so total utility must be at its maximum value.
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The requirement of a "double coincidence of wants" is the chief __________ of the __________ exchange system
A) advantage; barter B) advantage; monetary C) disadvantage; barter D) disadvantage; monetary
On which kinds of goods do governments generally place price ceilings?
What will be an ideal response?
Because the U.S. economy failed to snap back from a mild recession in 2001, the Fed pushed the federal funds rate down to 1 percent. What effect did this have on the economy?
What will be an ideal response?
To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.