A consumer's demand curve for apples
A)is derived by varying the price of apples and determining the quantities of apples at which the marginal utility per dollar spent on apples equals the marginal utility per dollar spent on other goods
B)is derived by determining how many apples will be purchased at different levels of income
C)is derived by varying the prices of other goods and determining the quantities of apples at which the marginal utilities per dollar spent on all goods are equal
D)slopes downward whenever the income and substitution effects cancel out
E)will be vertical if the substitution effect outweighs the income effect

Question

Quizplus · Accepted Answer

The consumer's demand curve for apples is derived by varying the price of apples and determining the quantities of apples at which the marginal utility per dollar spent on apples equals the marginal utility per dollar spent on other goods. This is based on the principle of diminishing marginal utility, which states that as a consumer consumes more of a good, the additional satisfaction or utility derived from each additional unit decreases. As a result, consumers will only continue to purchase a good as long as the marginal utility they receive from consuming it is greater than or equal to the price they pay for it.

A Consumer's Demand Curve for Apples