A Model That Sometimes Makes Incorrect Predictions May Be Used

question 142

Multiple Choice

A model that sometimes makes incorrect predictions may be used by economic decision makers

• A)under no circumstances
• B)only if its assumptions are detailed and realistic
• C)if it is mathematical and computerized
• D)if it is simple enough for a child to understand
• E)until a better model is developed

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Definitions:

Diminishing Marginal Utility

The principle that as a person consumes more of a good, the satisfaction (utility) gained from consuming an additional unit decreases.

Total Satisfaction

The total amount of pleasure or utility that a consumer receives from consuming a certain quantity of goods or services.

Utility-Maximizing

The process of adjusting consumption of goods and services to achieve the highest possible level of satisfaction or utility.

Satisfaction

Describes the feeling of fulfillment or pleasure that comes from acquiring or consuming a product or service.