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.
c
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The "law of demand" is illustrated by a
A) rightward shift of the demand curve. B) leftward shift of the demand curve. C) movement along the demand curve. D) Both answers A and B are correct.
Recent research estimates that the short-run price elasticity of demand for gasoline in the U.S. is -0.3, and the long-run price elasticity of demand is -1.4. What happens if the govenment increases the federal gasoline tax?
A) Consumer expenditures on gasoline increase over the short run and long run B) Consumer expenditures on gasoline decline over the short run and increase over the long run C) Consumer expenditures on gasoline increase over the short run and decline over the long run D) Consumer expenditures on gasoline decrease over the short run and long run