What is the relationship between marginal utility and total utility? What happens to total utility as marginal utility declines?
What will be an ideal response?
Marginal utility is the change in total utility resulting from a one-unit change in the consumption of a good or service. As marginal utility declines, the additional utility per unit consumed decreases, so total utility rises at a decreasing rate. When marginal utility reaches zero, total utility is at its maximum. If marginal utility continues to decline below a value of zero, so that marginal utility becomes negative, then total utility begins to fall.
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Z is a normal good. The equilibrium price and equilibrium quantity of Z in the year 2011 was $25 and 60 units, respectively
It was seen that, in 2014, the equilibrium price of Z had decreased to $15, but the equilibrium quantity had increased to 70 units. Other things remaining the same, which of the following could explain this change? A) Shift of the supply curve of Z to the left B) Shift of the demand curve for Z to the right C) Shift of the supply curve of Z to the right D) Shift of the demand curve for Z to the left
If the price of salt increases and the quantity demanded does not change, then
A) the price elasticity of demand is equal to zero. B) demand is perfectly inelastic. C) the demand curve for salt is horizontal. D) Both answers A and B are correct.
The larger the fraction of an investment financed by borrowing
A) the greater the potential return and the smaller the potential loss on that investment. B) the smaller the potential return and potential loss on that investment. C) the greater the potential return and potential loss on that investment. D) the smaller the potential return and the greater the potential loss on that investment.
"The typical age-earning cycle provides evidence of economic discrimination by age." Do you agree or disagree? Why?
What will be an ideal response?