Which of the following is false about the assumptions that economists make about utility?
A)Utility can be used to rank alternative combinations of consumption.
B)Consumers can be worse off with too much of a good.
C)Utility levels cannot be used to compare consumer preferences of different people.
D)Marginal utility increases at a decreasing rate.
E)The units used to measure utility do not matter.

Question

Quizplus · Accepted Answer

B is false because the principle of diminishing marginal utility suggests that as a consumer consumes more of a good, the additional satisfaction (marginal utility) gained from consuming an additional unit of that good decreases, not that consumers can be worse off with too much of a good.

Which of the Following Is False About the Assumptions That