Cell phone companies rely on the ________ of conversation to make unlimited night and weekend minutes on cell phone plans profitable.
A) real-income effect
B) consumer optimum
C) marginal utility
D) diminishing marginal utility
E) substitution effect

Question

Quizplus · Accepted Answer

The concept of diminishing marginal utility suggests that as a consumer consumes more of a good or service, the additional satisfaction gained from each additional unit of consumption decreases. In the case of cell phone plans with unlimited night and weekend minutes, customers are more likely to use their phones heavily during those times, leading to reduced marginal utility during daytime hours. This allows cell phone companies to offer unlimited night and weekend minutes while still turning a profit.

Cell Phone Companies Rely on the ________ of Conversation to Make