According to Utility Theory, Consumer Purchase Decisions Are Made Such

question 365

Multiple Choice

According to utility theory, consumer purchase decisions are made such that

• A) the value of the ratio of marginal utility to price for the last units purchased and consumed is equal.
• B) the difference between the value of the marginal utility of the last unit purchased and the price paid is maximized.
• C) the total utility of the last unit purchased is equal to the price of that unit.
• D) the total utility from consuming the good is less than the marginal utility of the last unit consumed.

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Definitions:

Plumbing Services

Professional services involved in installing, repairing, and maintaining the piping and fixtures associated with water distribution and waste water disposal.

Short Run

A period in economics during which at least one input (like capital) is fixed, focusing on immediate effects rather than long-term outcomes.

Profit-Maximizing Price

The price level at which a firm can achieve the maximum possible profit, calculated by equating marginal cost with marginal revenue.

Total Revenue

The cumulative revenue a company collects from the sale of goods or offering of services during a given time frame.