If Radhika wants to purchase two slices of pizza when the price is $3 per slice, then, based on the law of diminishing marginal utility, if the price drops to $1.50 per slice, she will be willing to buy
A) fewer than two slices of pizza.
B) between two and four slices of pizza.
C) more than two slices of pizza.
D) two slices of pizza.

Question

Quizplus · Accepted Answer

The law of diminishing marginal utility suggests that as the price of a good decreases, consumers will be willing to buy more of it because the utility (satisfaction) they get from each additional unit is greater than the cost. Since the price per slice has been halved from $3 to $1.50, Radhika will be willing to buy more than two slices of pizza, assuming her marginal utility per slice remains positive.

If Radhika Wants to Purchase Two Slices of Pizza When