Which of the Following Statements Illustrates Diminishing Marginal Utility

question 36

Multiple Choice

Which of the following statements illustrates diminishing marginal utility?

• A)An extra dollar of income to a poor person provides that person with more additional utility than does an extra dollar to a rich person.
• B)An extra dollar of income to a poor person provides that person with less additional utility than does an extra dollar to a rich person.
• C)An extra dollar of income to a poor person provides that person with the same additional utility as does an extra dollar to a rich person.
• D)An extra dollar of income to a poor person provides that person with the same total utility as does an extra dollar to a rich person.

---

Definitions:

Competitive Return

The earning or return that an investment generates, over and above the risk-free rate, due to its competitive advantage.

Economic Profit

The difference between total revenue and total cost, including both explicit and implicit costs.

Investment

The allocation of resources, usually financial, into assets with the expectation of generating income or profit in the future.

Economic Rent

A return on an asset or payment to a factor of production in excess of what's necessary to keep it in its current use.