Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Consumers will always spend their entire income on one good.
B
Consumers will continue to purchase a good as long as the marginal utility exceeds the price.
C
All goods provide equal levels of satisfaction.
D
Marginal utility decreases with the increase in income.
Understanding the Answer
Let's break down why this is correct
Answer
The principle of marginal utility helps us understand how consumers make choices about what to buy. It suggests that people make decisions based on the additional satisfaction, or utility, they get from consuming one more unit of a good or service. For example, if you are really hungry and eat a slice of pizza, the first slice gives you a lot of satisfaction. However, if you eat a second slice, it might still taste good but not as satisfying as the first, which means the extra happiness you get from that second slice is less. This idea shows that consumers will keep buying something as long as the extra satisfaction from it is greater than the cost, guiding their choices in the marketplace.
Detailed Explanation
This principle says that people buy more of something if it gives them more satisfaction than it costs. Other options are incorrect because Some might think that consumers only buy one item; It’s a common mistake to think all products are equally satisfying.
Key Concepts
Marginal utility
Topic
Marginal Utility and Consumer Choice
Difficulty
easy level question
Cognitive Level
understand
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