Asked by Jeeva Senthilnathan on May 09, 2024

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Which of the following best explains why most people don't consume units of goods to the point that their marginal utility falls to zero?

A) If marginal utility is falling, then total utility is falling.
B) Consumers face budget constraints that limit how much they can purchase.
C) Governments tend to limit how much of a good a person is allowed to consume.
D) The price of a good tends to rise as an individual attempts to purchase more.

Marginal Utility

The supplementary enjoyment a consumer experiences when they consume an extra unit of a good or service.

Budget Constraints

Budget constraints represent the limitations on the spending choices of consumers based on their income and the prices of goods and services.

Total Utility

The overall satisfaction a consumer receives from consuming a particular quantity of goods or services.

  • Gain insight into the influence that budgetary restrictions have on consumer decision-making.
  • Understand the impact of diminishing marginal utility on consumer decision-making.
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JP
Jaskaran PattarMay 11, 2024
Final Answer :
B
Explanation :
Consumers are limited by their budget constraints, which restrict the amount of goods they can purchase before reaching a point where the marginal utility of a good falls to zero. This means they often stop consuming more of a good because they either run out of money or choose to spend their remaining money on other goods that provide higher utility.