A Basic Hypothesis of Marginal Utility Theory Is That the Utility

question 67

Multiple Choice

A basic hypothesis of marginal utility theory is that the utility a consumer derives from successive units of a good diminishes as total consumption of the good increases.This hypothesis is known as

• A)the paradox of value.
• B)the utility theory of demand.
• C)utility maximization.
• D)the law of diminishing marginal utility.
• E)the law of diminishing total utility.

---

Definitions:

Normal Profit

The minimum profit necessary for a company to remain competitive in the market, often considered the cost of doing business.

Marginal Cost

The cost increase associated with the production of an extra unit of a product or service.

Competitive Firms

Businesses that operate in a market environment where they vie with others to offer goods or services, focusing on price, quality, and innovation.

Monopolists

Individuals or entities that hold a monopoly, controlling the entire supply of a good or service in a particular market, eliminating competition.