Refer to the Graph Shown

question 93

Multiple Choice

Refer to the graph shown. Between points C and D, marginal utility is:

• A) decreasing, and so total utility is falling.
• B) positive, and so total utility is increasing.
• C) positive, and so total utility is falling.
• D) decreasing, and so total utility is at its maximum.

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Definitions:

Prices Fall

A situation in the market where the cost of goods or services decreases due to various factors such as supply and demand.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return.

Current Consumption

The portion of income or resources that is spent on goods and services at the present time, as opposed to saving for future consumption.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased at given prices and within a given budget.