Question

use the accompanying graph, which illustrates the marginal benefit of consumption, to answer the following questions. a. you became a licensed electrician last year and have been enjoying a higher income than ever before. you choose to spend the majority of your income on amenities you couldnt previously afford. place point a at a point that plausibly represents your current level of consumption. b. after many years of work as an electrician, a major economic downturn leaves you unemployed. youre finding that you must pinch pennies just to afford basic necessities. you decide to return to school, so you can pursue a career in computer programming. place point b at a point that plausibly represents this level of consumption. c. given the two previous events, place point c at a point that represents consumption smoothing over the long run.

Explanation:

a. When income is higher, more consumption and higher - level amenities can be afforded, so point A is at a higher consumption and marginal benefit level.
b. During unemployment due to economic downturn, only basic necessities can be afforded, so point B is at a lower consumption and marginal benefit level.
c. Over the long - run, consumption smoothing occurs, and point C represents a more stable, long - term consumption level between A and B considering the previous events.

Answer:

a. A point at a high consumption and high marginal - benefit level on the graph.
b. A point at a low consumption and low marginal - benefit level on the graph.
c. A point between A and B that represents long - run consumption smoothing.