Which of the Following Is NOT an Assumption of Marginal

question 286

Multiple Choice

Which of the following is NOT an assumption of marginal utility theory?

• A) A consumer derives utility from the goods consumed.
• B) Each additional unit of consumption yields additional utility.
• C) Consumers maximize their total utility.
• D) As more of a good is consumed, the decrease in the marginal utility from the good means that the total utility from the good decreases also.

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Definitions:

Earnings Rate

The rate at which an investment or savings account generates income, usually expressed as a percentage of the principal.

Compound Interest

Interest calculated on the initial principal, including all of the accumulated interest from previous periods on a deposit or loan.

Present Value Factor

A factor used in calculating the present value of a future sum of money or a stream of cash flows, given a specific interest rate.

Annuity

A financial product that provides regular payments over a specified period of time, often used as a retirement income strategy.