Which of the Following Best Describes the Principle of Diminishing

question 88

Multiple Choice

Which of the following best describes the principle of diminishing marginal utility? As an individual consumes more of a good:

• A) the total utility obtained will eventually fall.
• B) the total utility obtained will eventually become negative.
• C) the addition to total utility obtained from the nth unit of the good will be less than that obtained from the immediately preceding unit of the good.
• D) the marginal utility will eventually become negative.

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Definitions:

Zero-Coupon Bond

A type of bond that does not pay interest during its life but is sold at a discount from its face value and pays its full face value at maturity.

Purchase Price

The amount of money paid to acquire a good or service.

Face Value

The nominal value or dollar value printed on a bond, note, or other financial instrument, indicating the amount due at maturity.

Effective Annual Yield

Effective Annual Yield is the return on an investment for a one-year period, taking into account the effect of compounding interest.