Lower prices increase the marginal utility per dollar spent and cause consumers to buy more of a good.On the other hand,higher prices lower the marginal utility per dollar spent and cause consumers to buy less of a good.This is a way of restating ________ in terms of marginal utility.

Question

Quizplus · Accepted Answer

This is a restatement of the law of demand, which posits that, all else being equal, as the price of a good decreases, the quantity demanded increases, and as the price increases, the quantity demanded decreases. This explanation ties the concept to changes in marginal utility per dollar spent.

Lower Prices Increase the Marginal Utility Per Dollar Spent and Cause