Given the price of a good or service, what determines how much a person is willing to pay for that good or service?
A) marginal utility
B) total utility
C) the substitution effect
D) average utility

Question

Quizplus · Accepted Answer

The concept of marginal utility suggests that a person is willing to pay for a good or service based on the additional satisfaction or benefit that they gain from each additional unit consumed. As the quantity consumed increases, the marginal utility decreases, so the person's willingness to pay also decreases. Therefore, the price of a good or service should reflect the marginal utility of the last unit consumed, in order to maximize total revenue.

Given the Price of a Good or Service, What Determines