If We Graph Marginal Utility, the Curve Has a Negative

question 197

Multiple Choice

If we graph marginal utility, the curve has a negative slope.This is because of the

• A)optimal purchase rule.
• B)law of increasing costs.
• C)law of diminishing marginal utility.
• D)marginal rate of substitution.

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Definitions:

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer, which is the value written on the face of the security.

Interest Rate Risk

The risk that an investment's value will change due to a change in the absolute level of interest rates.

Reinvestment Risk

The risk of having to reinvest income or principal at a lower interest rate in a fluctuating interest rate environment.

Default Risk

The possibility that a borrower will fail to pay back a loan or meet contractual obligations.