Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increase consumption of the good
B
Decrease consumption of the good
C
Maintain current consumption levels
D
Allocate resources to a different good
Understanding the Answer
Let's break down why this is correct
Answer
In marginal analysis, marginal utility refers to the additional satisfaction a consumer gets from consuming one more unit of a good. If a consumer notices that the marginal utility is decreasing, it means that each extra unit they consume is giving them less satisfaction than before. To maximize overall satisfaction, the consumer should consider reducing the amount of that good they buy and instead allocate their resources to other goods that provide higher marginal utility. For example, if someone is eating slices of pizza and finds that the fifth slice is not as enjoyable as the first, they might choose to stop eating pizza and instead buy a dessert that they enjoy more. By doing this, they can increase their total satisfaction by focusing on what gives them the most happiness.
Detailed Explanation
When the extra satisfaction from consuming more of a good goes down, it means you should eat less of it. Other options are incorrect because Some might think that more is always better; Staying the same might seem safe, but if you're not enjoying it as much, you're missing out on better options.
Key Concepts
Marginal utility
Resource allocation
Topic
Marginal Analysis in Economics
Difficulty
medium level question
Cognitive Level
understand
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