Diminishing marginal utility is best illustrated by which of the following statements?
a. A decrease in the price of hot dogs will cause consumers to buy more hot dogs, because the lowered price has increased their effective real income.
b. A person will receive less satisfaction from consuming four hot dogs than from consuming three hot dogs.
c. A person will receive less added satisfaction from consuming a fourth hot dog in a week than from consuming the third hot dog in a week.
d. If the price of hot dogs declines, people's tastes for hot dogs will increase.
QUESTION 2If a resource can be put to a single use and has no alternative uses then:
a. economic rents are zero.
b. transfer earnings are maximized.
c. total earnings are zero.
d. all earnings are economic rents.
e. all earnings are transfer earnings.
QUESTION 3The imposition of a minimum wage in the unskilled labor market creates labor surplus or unemployment.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4Which of the following is true?
a. A good for which the marginal utility of the last unit of a good consumed is greater will provide more total utility from consumption of the good.
b. If marginal utility is positive but diminishing, total utility increases with consumption of a good.
c. If marginal utility is diminishing, total utility must be diminishing.
d. Total utility is equal to the change in marginal utility from consuming an added unit of a product.
QUESTION 5If the elasticity of supply of a resource is greater than zero but less than infinity, its income will comprise of:
a. only economic rent.
b. only transfer earnings.
c. salaries and traveling allowances.
d. both economic rent and transfer earnings.
e. salaries, traveling allowances, as well as other incentives.
QUESTION 6Programs like Medicaid in the United States provide low-income households with medical care, because of the attitude of unfairness associated with the allocation of health care.
a. True
b. False
Indicate whether the statement is true or false
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