Which of the following statements does not invoke interpersonal utility comparisons? Select one:

a. The total utility a millionaire derives from $100 is less than the total utility a poor person derives from $100.

b. For both the millionaire and the pauper, the marginal utility they derive from the one-thousandth dollar is less than the marginal utility they derive from the five-hundredth dollar.

c. The marginal utility a millionaire derives from the one-millionth dollar is less than the marginal utility a poor person derives from the one-hundredth dollar.

d. None of the above, because all rely on interpersonal utility comparisons.

Question

Yuliana Solomon

Business

9 September, 00:52

Which of the following statements does not invoke interpersonal utility comparisons? Select one:

a. The total utility a millionaire derives from $100 is less than the total utility a poor person derives from $100.

b. For both the millionaire and the pauper, the marginal utility they derive from the one-thousandth dollar is less than the marginal utility they derive from the five-hundredth dollar.

c. The marginal utility a millionaire derives from the one-millionth dollar is less than the marginal utility a poor person derives from the one-hundredth dollar.

d. None of the above, because all rely on interpersonal utility comparisons.

+1

Answers (1)

Know the Answer?

Sonia Martin · Answer 1

The correct answer is letter "B": For both the millionaire and the pauper, the marginal utility they derive from the one-thousandth dollar is less than the marginal utility they derive from the five-hundredth dollar.

Explanation:

Utility is referred to as the degree of satisfaction perceived by individuals while consuming a product or service. Marginal utility reflects the aggregate utility of consuming one more sample of a product. Interpersonal utility comparisons are made to measure how much utility represents the satisfaction of a need for one individual and another.

In such scenario, the marginal utility of spending $5,000 will be higher than spending $1,000 for both the rich and the poor because one amount itself is greater than the other which implies more goods and services can be acquired (mostly on the poor's side) or invested (mostly on the rich's side).