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FSOT: 500 Test Prep Study Questions

Category - Economics

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If utility is the measure of satisfaction gained by consuming a good or service,then according to the principle of diminishing marginal utility:
  1. Five doughnuts makes you happier than four, but the fifth doughnut does not make you as happy as the first
  2. Five doughnuts makes you happier than four and the third doughnut makes you happier than the first
  3. Five doughnuts does not make you as happy as four because utility has been maximized
  4. Five doughnuts make you happier than one and each additional doughnut makes you happier than the last
Explanation
Answer: A - Five doughnuts makes you happier than four, but the fifth doughnut does not make you as happy as the first.
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