Suppose that the price of telephones decreases. If more are purchased then:
A) the total utility of telephones will decrease.
B) the total utility of telephones will be unchanged.
C) the marginal utility of telephones will likely increase.
D) the marginal utility of telephones will likely decrease.

Question

Quizplus · Accepted Answer

When the price of telephones decreases and more are purchased, the marginal utility of telephones will likely decrease. This is because marginal utility refers to the additional satisfaction or utility that a consumer receives from consuming one more unit of a good or service. As more units are consumed, the additional satisfaction from each additional unit typically decreases, according to the law of diminishing marginal utility.

Suppose That the Price of Telephones Decreases