Suppose people are in consumer equilibrium buying 10,000 units of good X at a given price. Then the price of good X falls to $0. It follows that people will buy more of good X and that the marginal utility of the last additional unit they buy will be __________ the __________ of the 10,000th unit.
A)lower than; marginal utility
B)greater than; average utility
C)the same as; marginal utility
D)greater than; marginal utility

Question

Quizplus · Accepted Answer

When the price of good X falls to $0, people will buy more of it, leading to a decrease in the marginal utility of the additional units due to the law of diminishing marginal utility.

Suppose People Are in Consumer Equilibrium Buying 10,000 Units of Good