Indicate whether each of the following statements is true or false. Explain why.
ID: 1247883 • Letter: I
Question
Indicate whether each of the following statements is true or false. Explain why.A. The law of diminishing marginal utility states that as an individual increases consumption of a given product within a set period of time, the utility gained from consumption eventually declines.
B. when prices are held constant, a diminishing marginal utility for consumption decreases the cost of each marginal unit of satisfaction.
C. Marginal utility measures the added satisfaction derived from a 1 unit increase in consumption, holding consumption of other goods and services constant.
D. When goods are relatively scarce, the law of diminishing marginal utility means that the added value of another unit of goods will be small in relation to the added value of another unit of services.
E. The law of diminishing marginal utility gives rise to a downward-sloping demand curve for all goods and services.
Explanation / Answer
A: true. At some point, the utility gained from the next unit of consumption will be less then the utility gained from the unit before it. B: false. The cost isn't changing since the the prices are held constant. C: True by definition D: False. The scarcity of the good in question shouldn't effect the marginal utility an individual consumer gets from that good. E: False. The downward sloping demand curve arises from the fact that as prices go down quantity demanded will go up. The law of diminishing marginal utility contributes to this effect but it is not the necessary condition for a downward sloping demand curve.