A Rational Individual Will Never Consume a Unit of a Good

question 33

Multiple Choice

A rational individual will never consume a unit of a good if its

• A) marginal utility is diminishing.
• B) marginal utility is less than average utility.
• C) marginal utility is increasing.
• D) marginal utility is negative.

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Definitions:

Licensing Suppliers

The process by which a business grants other businesses permission to manufacture its product or provide its service in exchange for a fee or royalty.

Price Floor

A government-imposed minimum price that can be charged for a commodity, above what would be set by market forces, to ensure that producers receive a minimum income.

Equilibrium Price

The price in the market where the amount of products offered matches the amount of products consumers want to buy.

Quota Rent

Quota Rent is the economic rent a producer earns from the difference between the domestic price and the world price due to a quota system limiting imports.