Question #30
Reading: Reading 39 Economics and Investment Markets
PDF File: Reading 39 Economics and Investment Markets.pdf
Page: 10
Status: Unattempted
Correct Answer: B
Question
The marginal utility of current consumption is most likely higher:
Answer Choices:
A. During economic expansions
B. Higher the wealth
C. During economic contractions
Explanation
Diminishing marginal utility of wealth means that an investor's marginal utility of
consumption declines as wealth increases. This suggests that marginal utility of
consumption is higher during periods of scarcity, such as during economic contractions.