Question

a. Which item below most accurately describes increasing marginal utility? An example of increasing marginal utility is Fricano's, a local sandwich shop, which offers a punch card that rewards customers for frequent business by providing the 10th sandwich purchased for free. Miles, Who is two years old and watches Sesame Street every morning. He usually finds the first 30 minutes of the show very entertaining, but loses interest quickly after that point stinky tofu, a Chinese speciality, which typically requires an acquired taste before becoming truly enjoyable. This normally occurs after the first few bites. O b. Despite the possiblity of exceptions, such as the correct response to the previous question, economists generally agree that the principle of diminishing marginal utility is a good model. Why? The model works well because O giver enough of something, the next unit of a good or activity will eventually provide less utility than the previous the marginal utility curve slopes upward. most goods and services qualify under the exceptions. the principle of diminishing marginal returns is actually flawed because we are never in the relevant range of consumption.

Answer 1

A

Correct Answer:

C

Here, the product gives higher enjoyment after few bites. It means that marginal utility increases with the consumption of the product increases.

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B.

Correct Answer:

A

It is the premise of the diminishing marginal utility, that says that utility decreases with the level of consumption.