Marginal Analysis Suggests That You Will Engage in More of an Activity

question 13

Multiple Choice

Marginal analysis suggests that you will engage in more of an activity if the:

• A) total benefit of the activity is less than the total cost.
• B) additional benefit from the activity exceeds the additional cost.
• C) total benefit from the activity exceeds the total cost.
• D) additional cost of the activity exceeds the additional benefit.

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Definitions:

Utility

A measure of satisfaction or happiness that consumers derive from the consumption of goods and services.

Perfect Substitutes

Two goods that could be used in place of each other with no loss of utility to the consumer.

Perfect Complements

Goods that are always used together in fixed proportions, where the consumption of one good requires the consumption of a specific quantity of another good.

Indifference Curves

Graphs representing combinations of goods among which a consumer is indifferent, showing trade-offs in consumption preferences.