A decrease in the price of product X will:
A) increase the marginal utility per dollar spent on X.
B) decrease the marginal utility per dollar spent on X.
C) result in an increase in the total utility from consumption of X.
D) do both (a) and (c).

Question

Quizplus · Accepted Answer

A decrease in the price of product X increases the marginal utility per dollar spent on X, as you get more utility for each dollar spent. This can lead to an increase in the quantity consumed, thereby increasing the total utility from consumption of X.

A Decrease in the Price of Product X Will