When the price of a good falls,the ratio of the marginal utility of that good divided by its price ________ and as a result,consumers purchase ________ of that good.
A) rises; more
B) falls; more
C) rises; less
D) falls; less

Question

Quizplus · Accepted Answer

When the price of a good falls, the marginal utility per dollar spent on that good increases because you're getting more utility for each dollar spent. As a result, consumers are incentivized to purchase more of that good to maximize their overall utility.

When the Price of a Good Falls,the Ratio of the Marginal