Which of the Following Best Explains Why Most People Don't

question 171

Multiple Choice

Which of the following best explains why most people don't consume units of goods to the point that their marginal utility falls to zero?

• A)If marginal utility is falling, then total utility is falling.
• B)Consumers face budget constraints that limit how much they can purchase.
• C)Governments tend to limit how much of a good a person is allowed to consume.
• D)The price of a good tends to rise as an individual attempts to purchase more.

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Definitions:

Income Tax Rate

The percentage of an individual or company's income that is paid to the government as tax.

After-Tax Discount Rate

The discount rate used in capital budgeting that accounts for taxes and reflects the net cost of borrowing and the opportunity cost of investing.

Straight-Line Depreciation

A method of calculating depreciation of an asset, where the expense is evenly spread over its useful life.

Initial Investments

The initial capital outlay required to start a business, purchase assets, or invest in securities.