Which of the following statements is correct?

Question

Quizplus · Accepted Answer

According to the law of diminishing marginal utility, as a consumer consumes more of a good, the additional utility (satisfaction) they receive from each additional unit will eventually decrease. This means that as the price of a good falls, a consumer will be able to purchase more of the good and still maximize their total utility. This is because the decrease in price allows the consumer to purchase more units of the good without experiencing as great a decrease in marginal utility as they would have at the higher price. Therefore, (C) is the correct statement. (A) is incorrect because the law of diminishing marginal utility does not imply anything about the slope of demand curves; (B) is incorrect because a fall in price does not necessarily cause a rise in marginal utility; (D) is incorrect because both MU and demand are based on the assumption that consumers make rational decisions to maximize their utility.

Which of the Following Statements Is Correct