Which of the Following Examples Best Describes the Concept of Diminishing

question 26

Multiple Choice

Which of the following examples best describes the concept of diminishing marginal benefit?

• A) If the weather gets cold, the demand for ice cream will fall.
• B) With each additional pen Jill buys, her willingness to pay for another pen decreases.
• C) Each additional unit of ice cream that John consumes gives him more and more satisfaction.
• D) If a seller of notebooks in a perfectly competitive market charges above the market price, his profit decreases.

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, reflecting the time value of money.

Cash Equivalent Price

The value of an asset that is readily convertible into a known amount of cash with negligible risk of changes in value.

Acquisition Date

The specific date on which an acquisition or takeover of one entity by another is officially completed.

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds, often used in lease agreements to calculate lease liabilities.