Which of the following statements is true?
A)Marginal utility theory predicts that an increase in a consumer's income increases consumption of all goods.
B)It is possible to derive the law of demand - that a higher price decreases the quantity demanded - using marginal utility theory.
C)Marginal utility theory makes no prediction about a consumer's responses to hikes in the prices of the goods and services he or she consumes.
D)Marginal utility theory predicts that all goods are normal goods and that all goods are substitutes for each other.
E)It is possible to derive the law of demand - that a higher price decreases demand - using marginal utility theory.

Question

Quizplus · Accepted Answer

Marginal utility theory can be used to derive the law of demand, which states that a higher price decreases the quantity demanded, as consumers will substitute towards goods that provide more utility per unit of cost.

Which of the Following Statements Is True