In using the concept of marginal utility as an argument for a downward-sloping demand curve, economists:
A) are ignoring the law of diminishing marginal utility.
B) invoke the law of diminishing marginal utility.
C) are denying the law of diminishing marginal utility.
D) are doing none of the above.

Question

Quizplus · Accepted Answer

Economists invoke the law of diminishing marginal utility in using the concept of marginal utility as an argument for a downward-sloping demand curve. According to the law, the more of a good or service an individual consumes, the less satisfaction or utility they derive from each additional unit consumed. Thus, as the price of a good or service decreases, consumers are willing to buy more of it because each additional unit purchased provides less marginal utility but at a lower cost, resulting in a higher overall utility for the consumer. This leads to a downward-sloping demand curve.

In Using the Concept of Marginal Utility as an Argument