If the first four units of a good consumed have marginal utilities of 8, 4, 2, and 1, respectively, this trend is an indication of the:
A. law of consumer equilibrium.
B. law of diminishing marginal utility.
C. law of diminishing consumer surplus.
D. law of supply.
Answer: B
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If marginal utility is a positive number,
A. the more you purchase, the more total utility you get. B. the more you purchase, the less total utility you get. C. utility is not affected by more purchases. D. then you are as well off as possible.
Why is the supply of oil more price elastic in the long run?
A) New deposits are found. B) Better extraction technology is developed. C) Firms have the ability to change the amount of all inputs. D) All of the above.
The theory of purchasing power parity says:
A. the real exchange rate is always less than one. B. the dollar price of a basket of goods in the U.S. should equal the yen price of a basket of goods in Japan. C. a dollar should buy the same goods no matter where in the world you go. D. the real exchange rate is always greater than one.
Refer to the above diagram. The firm will shut down at any price less than:
A. P1.
B. P2.
C. P3.
D. P4.