Can marginal utility be negative? Briefly explain with an example
Please provide the best answer for the statement.
Yes. The consumption of an additional unit of a product may be unpleasant. Consider a person who likes pizza. The first four slices of a large pizza taste great. Each slice gives the consumer additional satisfaction, although the amount of satisfaction diminishes with the consumption of each slice. Finally, the consumer eats the fifth slice of pizza and develops a stomachache from overeating. That fifth slice had negative marginal utility for this pizza consumer.
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An increase in the minimum wage to $15 per hour would lead to
A) an increase in search activity for many workers. B) a decrease in search activity for many workers. C) a decrease in unemployment. D) no change in unemployment. E) no change in employment.
Suppose you borrow $2,000 for one year and at the end of the year you repay the $2,000 plus $110 of interest. The expected inflation rate was 2.2% at the time you took out the loan, but the actual inflation rate turned out to be 3.3%
What was the actual real interest rate you paid? A) 2.2% B) 3.3% C) 5.5% D) 8.8%
Most economists believe that there are positive externalities in education. One can conclude that a free market would fail to give the socially optimal outcome because in comparison to the socially optimal (efficient) equilibrium, the inefficient equilibrium
A. price and quantity would be too high. B. price would be too low and quantity would be too high. C. price and quantity would be too low. D. price would be too high and quantity would be too low.
The above figure shows the demand and cost curves for a firm in monopolistic competition. In the long run, the demand for this firm's product will
A) decrease as other firms enter the industry. B) decrease as product differences disappear. C) become less elastic as firms exit the industry. D) become less elastic as other firms enter the industry.