As a consumer's income decreases,marginal utility theory predicts that
A)the price of normal goods falls.
B)the demand for normal goods decreases.
C)the demand for all goods decreases.
D)the demand for normal goods increases.
E)total utility increases.

Question

Quizplus · Accepted Answer

According to the law of diminishing marginal utility, as a consumer's income decreases, the marginal utility of each additional unit of a normal good decreases. As a result, the demand for the good decreases, as consumers are willing to pay less for each unit of the good. This is reflected in choice B, where the demand for normal goods decreases.

As a Consumer's Income Decreases,marginal Utility Theory Predicts That