Marginal Utility Theory Predicts That an Increase in Income Means

question 66

Multiple Choice

Marginal utility theory predicts that an increase in income means that the consumption of

• A) all goods will increase.
• B) normal goods will increase and consumption of inferior goods will decrease.
• C) inferior goods will increase and consumption of normal goods will decrease.
• D) None of the above answers is correct.

---

Definitions:

Intrinsic Value

The actual, underlying worth of an asset, investment, or company based on fundamental analysis without regard to its market value.

ROE

Return on Equity, a financial ratio indicating the profitability of a company relative to its shareholders' equity.

EPS

Earnings per share, a financial metric indicating the profitability of a company on a per-share basis.

Required Return

The minimum return a investor expects or needs from an investment, considering the risk involved.