The Principle of Diminishing Marginal Utility

question 98

Multiple Choice

The principle of diminishing marginal utility:

• A)refers to the tendency of total utility to increase until an individual's budget is no longer constrained.
• B)refers to the tendency of marginal utility to decline as the amount of consumption of a good or service increases.
• C)indicates that,if a good is inferior,less of it will be purchased when income falls.
• D)assumes all goods are normal.

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Definitions:

Loaf of Bread

A shaped mass of baked bread, commonly sliced for consumption and made from a variety of grains.

Price Fixing

An illegal agreement among competitors to set prices at a certain level, rather than letting them fluctuate naturally with market forces.

Industry Tightening

A period where industry competition becomes more intense, often leading to consolidation, increased regulation, or higher barriers to entry.

Monopolistic Competition

A market structure characterized by many competitors selling products that are similar but not identical.