Author Question: The assumption that the marginal utility of wealth diminishes implies that A) total utility falls ... (Read 88 times)

joe · **on:** Jun 29, 2018

The assumption that the marginal utility of wealth diminishes implies that

A) total utility falls when wealth increases.
B) the marginal utility of wealth is negative.
C) total utility increases with wealth and each additional unit of wealth increases total utility by a smaller amount.
D) total utility increases with wealth and each additional unit of wealth increases total utility by the same amount.

Question 2

What is the difference between the long-run aggregate supply and the short-run aggregate supply curves?

What will be an ideal response?

InfiniteSteez · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

The long-run aggregate supply curve, LAS, is the relationship between the price level and real GDP when real GDP equals potential GDP. The LAS curve is vertical. Along the LAS curve, both the prices of goods and services and the prices of resources, such as the money wage rate, change. The short-run aggregate supply curve, SAS, is the relationship between the price level and the quantity of real GDP supplied in the short run when the money wage rate and other resource prices are constant. The SAS curve slopes upward. Along the SAS curve, only the price level changes; the money wage rate and other resource prices are constant. The SAS curve shifts leftward when the money wage rate (or other costs) rise.