After watching a movie, Alan chooses to go for a walk rather than watch a second movie. Economists would explain his choice using the concept of:
A)budget constraints.
B)diminishing marginal utility.
C)income effect.
D)substitution effect.

Question

Quizplus · Accepted Answer

Alan's choice is best explained by diminishing marginal utility, which suggests that the additional satisfaction (utility) Alan gets from consuming a good or service decreases with each additional unit consumed. In this case, watching a second movie likely offers him less satisfaction compared to the first, leading him to choose a different activity.

After Watching a Movie, Alan Chooses to Go for a Walk