In Consumer Equilibrium

question 29

Multiple Choice

In consumer equilibrium:

• A) the average utility from each dollar spent is the same.
• B) total utility cannot be increased by reallocating spending among the goods consumed.
• C) total utility obtained from the consumption of each product is at a maximum.
• D) the marginal utility from the last unit of each good consumed is the same.

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Definitions:

Inflation

A measure of the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Risk Premium

The extra return or compensation investors demand for taking a higher risk compared to a risk-free investment.

Systematic Risk

The risk associated with the overall market or a specific segment of it that cannot be reduced through diversification.

Dividend

A portion of a company's earnings distributed to its shareholders, typically paid on a regular basis.