A Basic Hypothesis of Marginal Utility Theory Is That the Utility

question 49

Multiple Choice

A basic hypothesis of marginal utility theory is that the utility a consumer derives from successive units of a good diminishes as total consumption of the good increases.This hypothesis is known as

• A)the utility theory of demand.
• B)the law of diminishing marginal utility.
• C)utility maximization.
• D)the law of diminishing total utility.
• E)the paradox of value.

---

Definitions:

Cost Hierarchy

A system that categorizes costs based on their direct traceability to production activities, often utilized in activity-based costing.

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific activities based on their use of resources, improving accuracy in pricing and product management.

Direct Labor

The cost of wages for workers directly involved in the manufacturing or production of goods.

Allocation Base

A measure of activity such as direct labor-hours or machine-hours that is used to assign costs to cost objects.