As price falls along the demand curve for pretzels,_____
A)the ratio of the marginal utility of pretzels to its price increases.
B)the marginal valuation of pretzels increases.
C)the consumption of pretzels increases and marginal utility decreases.
D)the marginal valuation of pretzels decreases.
E)total utility and marginal utility remain unchanged.

Question

Quizplus · Accepted Answer

According to the law of demand, as price falls, quantity demanded increases. As a result, consumers are willing to pay less for each additional unit of pretzels consumed, which means the marginal valuation of pretzels decreases. Additionally, the ratio of the marginal utility of pretzels to its price may or may not increase, depending on how quickly the marginal utility decreases as consumption increases.

As Price Falls Along the Demand Curve for Pretzels,_____