A Rational Consumer Should Not Consume More of a Good

question 52

Multiple Choice

A rational consumer should not consume more of a good when:

• A) total utility is decreasing.
• B) marginal utility is diminishing.
• C) the price is high.
• D) income is decreasing.

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Definitions:

Economic Rent

The excess payment made to a factor of production over and above what is needed to keep it in its current use.

Land

In economics, it refers to all natural resources used to produce goods and services, one of the factors of production.

Profits

The financial gain achieved when the revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain the activity.

Joseph Schumpeter

An economist known for his theory on business cycles and for coining the term "creative destruction" to describe the process of innovation in economics.