Marginal utility theory predicts that
A) when the price of a good rises, the quantity demanded of that good decreases.
B) if the price of one good rises, the demand for a substitute good increases.
C) if income increases, the demand for a normal good increases.
D) All of the above answers are correct because all are predictions of marginal utility theory.

Question

Quizplus · Accepted Answer

Marginal utility theory suggests that consumers make choices to maximize their utility. It predicts that a rise in the price of a good decreases its quantity demanded (A), a rise in the price of one good increases the demand for its substitute (B), and an increase in income raises the demand for normal goods (C).

Marginal Utility Theory Predicts That