For Matthew, the Marginal Utility of the 9th Soda in a Day

question 159

Multiple Choice

For Matthew, the marginal utility of the 9th soda in a day is positive and the marginal utility of the 10th soda in a day is zero. This

• A) implies that Matthew's demand curve for sodas per day will become upward sloping at 10 sodas per day.
• B) is impossible because each additional unit of consumption of any good must provide positive marginal utility.
• C) implies that at a zero price Matthew's demand curve will intersect the quantity axis at 10.
• D) implies that Matthew maximizes utility by consuming 9 sodas per day.

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Definitions:

Systematic Risk

The danger that affects all investments within an entire market or a specific sector, commonly referred to as market risk or non-diversifiable risk.

Treasury Bills

Short-term government securities issued at a discount from the par value and pay no interest.

Market Portfolio

A theoretical portfolio that contains every asset in the market, weighted by market capitalization.

Security Market Line

A graphical representation of the expected return of investments as a function of their risk, specifically their beta.