If the price of a good falls, the marginal utility per dollar spent on that good:
A) also falls.
B) stays the same.
C) rises.
D) will rise or fall, depending on the consumer.

Question

Quizplus · Accepted Answer

When the price of a good falls, the consumer will be able to buy more units of the good for the same amount of money. This will increase the consumer's total utility from the good, and since the total amount of money spent on the good has not changed, the marginal utility per dollar spent on the good will increase. Therefore, the answer is (C) rises.

If the Price of a Good Falls, the Marginal Utility