The law of diminishing marginal utility gives us insight into the downward-sloping demand curve because consumers are willing to pay a higher price for goods with high marginal utility.
Answer the following statement true (T) or false (F)
True
Marginal utility is high when goods are scarce. That corresponds to the top of the demand curve where a high price has a low quantity demanded.
You might also like to view...
According to Keynes
A) consumption is directly related to income but saving has no relationship with income. B) consumption is directly related to income but saving is inversely related to income. C) both consumption and saving are positively related to real disposable income. D) consumption is positively related to the interest rate.
Refer to the above figure. Suppose that the economy was originally at point A, and then it reached point C by means of a fiscal policy action. Which of the following is correct?
A) Point C is both a short-run equilibrium and a long-run equilibrium that could have been attained through an increase in government spending. B) Point C is a short-run equilibrium that could have been attained through a reduction in government spending, but in the long run the economy will end up at point B. C) Point C is a short-run equilibrium that could have been attained through a tax cut, but in the long run the economy will end up at point B. D) Point C is a long-run equilibrium that could have been attained through a tax increase, although reaching this point first required a short-run equilibrium at point B.