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:

Gross Earnings

The total amount of money an individual earns before any deductions or taxes are applied.

Public Holidays

Days that are recognized and celebrated as holidays according to the law, during which businesses and government offices may be closed.

Total Hours

Refers to the aggregate amount of time spent or required for a particular activity or work over a specified period.

Workweek

The standard period of time during which work is typically performed, often defined as 40 hours across five days in many countries.