The Additional Cost Resulting from a Small Increase in Some

question 116

Multiple Choice

The additional cost resulting from a small increase in some activity is called the:

• A) marginal cost.
• B) marginal benefit.
• C) diminishing returns of the activity.
• D) opportunity cost.

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Definitions:

Consumption Bundle

A collection of goods or services that a consumer selects for purchase, representing a combination of different items that provide utility.

Income

The total money received by an individual or household from various sources, including wages, salaries, benefits, and investments.

Convex Preferences

In consumer theory, these are preferences where blends or combinations of two goods are preferred to extreme allocations, reflecting a desire for balance.

Indifference Curve

A graph representing different bundles of goods between which a consumer is indifferent, showing the combination of two goods that give the same level of satisfaction to the consumer.