If, for a Given Disposable Income Level, the Disposable Income

question 190

Multiple Choice

If, for a given disposable income level, the disposable income line lies above the consumption curve, saving:

• A)equals consumption.
• B)equals disposable income.
• C)is less than zero.
• D)is equal to zero.
• E)is greater than zero.

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Definitions:

Total Utility

The overall satisfaction or enjoyment a person gets from consuming a certain quantity of goods or services.

Marginal Utility

The boost in contentment or usefulness someone achieves from consuming an additional item of a good or service.

Consumer Surplus

The variance between the price consumers intend to pay for a good or service and the price they actually incur.

Marginal Utility

The extra pleasure or benefit gained by a consumer from using one more unit of a product or service.