Exhibit 6­6 Consider Exhibit 6­6

question 50

Multiple Choice

Exhibit 6­6 Consider Exhibit 6­6.Which of the following best describes what it revealsabout total and marginal utility for baseball game tickets?

• A)Marginal utility is constantly pulling total utility down, until eventually it becomes negative.
• B)Marginal utility is constantly pulling total utility up and will continue to increase total utility as long as the Person consumes more goods.
• C)Marginal utility is constantly pulling total utility up, but by less each time.
• D)At first marginal utility is positive and pulls total utility up but at a decreasing rate; then marginal utility Becomes negative and pulls total utility down.
• E)At first marginal utility is positive and pulls total utility up, but then it becomes negative and makes Total utility become negative as well.

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Definitions:

Residual Income

A measure of a company's profitability, calculated by subtracting the cost of capital from operating profits.

Minimum Required Rate

The lowest rate of return that an investment must yield to be considered acceptable.

Residual Income

Income that continues to be generated after the initial effort has been expended, or in managerial accounting, the operating income that an investment center earns above the minimum required return on its operating assets.

Minimum Required Rate

The lowest return on investment that an investor is willing to accept, considering the risk involved.