Asked by Gargi Patil on Jul 09, 2024
Verified
If the price of product X rises, then the resulting decline in the amount purchased will
A) necessarily increase the consumer's total utility from his total purchases.
B) increase the marginal utility of the last unit consumed of this good.
C) increase the total utility from purchases of this good.
D) reduce the marginal utility of the last unit consumed of this good.
Marginal Utility
The extra pleasure or benefit a customer gets from purchasing an additional unit of a product or service.
- Comprehend how consumer choices are influenced by changes in product prices and the concept of income effect.
Verified Answer
AB
Aiden BelloneJul 14, 2024
Final Answer :
B
Explanation :
When the price of a product increases, consumers tend to buy less of it. According to the law of diminishing marginal utility, as the quantity consumed of a good decreases, the marginal utility (satisfaction) derived from the last unit consumed increases because the consumer is now getting less of that good, making each unit more valuable to them.
Learning Objectives
- Comprehend how consumer choices are influenced by changes in product prices and the concept of income effect.