Smith, Who Has $10,000, Receives an Extra Dollar, as Does

question 175

Multiple Choice

Smith, who has $10,000, receives an extra dollar, as does Jones, who has $100,000. Smith receives more utility from the extra dollar than does Jones. This is an example of

• A)an interpersonal utility comparison.
• B)the law of diminishing marginal utility.
• C)the diamond-water paradox.
• D)the law of total utility

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Definitions:

Circular-Flow Diagram

A graphical representation illustrating the flow of funds among households, companies, and the government within an economy.

Factors Of Production

Inputs necessary for the creation of goods and services, including labor, land, capital, and entrepreneurship.

Circular-Flow Diagram

A visual model of the economy that shows how dollars flow through markets among households and firms, illustrating the interactions between key sectors of the economy.

Factors Of Production

Resources used in the creation of goods and services, traditionally categorized into land, labor, capital, and entrepreneurship.