The law of diminishing marginal utility refers to
A. the idea that marginal utility is negative.
B. the idea that total utility is negative.
C. a consumer's decrease in additional satisfaction as she consumes more and more units of a good.
D. a consumer's decrease in total satisfaction as she consumes more units of a good.
Answer: C
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Lucas and Sargent argue that the short-run trade-off between unemployment and inflation is caused by
A) workers and firms rapidly adjusting wages and prices in response to changes in expectations. B) workers and firms using all the information available to predict inflation. C) workers and firms being fooled by unexpected changes in monetary policy. D) workers and firms using Fed policy to predict inflation.
The above figure depicts a short-run production function for Albert's Pretzels. The marginal productivity of labor
A) rises then falls as the amount of capital increases. B) falls then rises as the amount of labor increases. C) is greater than or equal to the average productivity of labor for all amounts of labor. D) is less than or equal to the average productivity of labor for all amounts of labor.
The Department of Education noticed that for loans granted to students without any strings, the average grade point average of the students decreases dramatically over time. Which one of the following can it use as a solution?
a. Renew the loans only if the students pass their courses b. Renew the loans regardless of students' passing c. Never renew the loans d. Shut down the Department of Education
LRE. After a decrease in AD, there will immediately be _____
a. inflation and recession b. deflation and recession c. inflation and expansion d. deflation and expansion