An increase in the price of product X causes a decrease in the quantity demanded for product X. One basic explanation for this is
A)the law of increasing opportunity cost.
B)the price-elasticity effect.
C)the law of supply.
D)the law of diminishing marginal utility.

Question

Quizplus · Accepted Answer

The law of diminishing marginal utility states that as a person consumes more of a product, the additional satisfaction from consuming an additional unit decreases. Therefore, when the price of product X increases, the quantity demanded decreases because consumers are less willing to pay a higher price for the additional units that provide less satisfaction.

An Increase in the Price of Product X Causes a Decrease