As More of a Good Is Consumed, the Marginal Benefit

question 48

Multiple Choice

As more of a good is consumed, the marginal benefit of the good

• A) decreases.
• B) increases.
• C) first decreases and then increases.
• D) remains constant.
• E) is unpredictable.

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Definitions:

Utility Function

An equation that assigns numerical values to different combinations of goods and services, capturing the level of satisfaction or preference that an individual derives from these combinations.

Paasche Price Index

An economic measure that calculates the change in the level of prices of a basket of goods and services purchased in the current period, compared to a base period, using the quantities bought in the current period.

Laspeyres Price Index

An economic measure that calculates the change in the cost of acquiring a fixed basket of goods and services, based on the prices of those goods and services in a base period.

Laspeyres Price Index

An economic index that calculates the change in the price level of a basket of goods and services based on the prices and quantities consumed in a base period.