If the price of a good decreases,the marginal utility per dollar spent ________ and consumers buy ________ of the good.
A) remains the same; more
B) remains the same; less
C) decreases; more
D) increases; less
E) increases; more

Question

Quizplus · Accepted Answer

When the price of a good decreases, the marginal utility per dollar spent on the good increases. This means that consumers will receive more satisfaction for each dollar spent on the good. Therefore, consumers will buy more of the good as the price decreases. This relationship is captured by the law of demand, which states that as the price of a good decreases, the quantity demanded of the good increases, ceteris paribus.

If the Price of a Good Decreases,the Marginal Utility Per