Which Statement Is TRUE If the Principle of Diminishing Marginal

question 40

Multiple Choice

Which statement is TRUE if the principle of diminishing marginal utility applies?

• A)When a customer at the Pie Palace continues to eat more pie,each additional piece of pie gives the same marginal utility.
• B)When a customer at the Pie Palace continues to eat more pie,each additional piece of pie gives less marginal utility.
• C)When a customer at the Pie Palace continues to eat more pie,each additional piece of pie lowers total utility.
• D)The total utility of pie is at a maximum,while the marginal utility of pie is still increasing.

---

Definitions:

Yield To Maturity

The total return expected on a bond if the bond is held until its maturity date.

Coupon Bond

A debt security that pays the holder a fixed interest amount (coupon) at scheduled intervals until the maturity date, when the principal amount is repaid.

Interest-Rate Risk

Interest-rate risk is the risk that changes in interest rates will negatively affect the value of an investment, particularly relevant for fixed-income securities.

Bond Duration

A measure of the sensitivity of a bond's price to changes in interest rates, representing the weighted average time until a bond's cash flows are received.