After Downing Three Glasses of Lemonade on a Hot Summer

question 29

Multiple Choice

After downing three glasses of lemonade on a hot summer afternoon, Todd says, "You would have to pay me to drink another glass!" This statement best illustrates

• A) the law of demand.
• B) the substitutability among goods.
• C) the law of diminishing marginal utility.
• D) that chocolate candy bars are an inferior good.

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Definitions:

Disposable Income

The fiscal potential for households to undertake spending and saving after income tax considerations.

Consumption

The process of using goods and services by households or individuals, contributing to overall economic activity.

Disposable Income

The amount of money individuals or households have available for spending and saving after income taxes have been deducted.

Consumption

The use of goods and services by households that leads to a decrease in their availability.