If price of a product falls
A) the marginal utility of the product also falls.
B) the budget line rotates to the right.
C) the budget line rotates to the left.
D) the indifference curve will shift to the left.

Question

Quizplus · Accepted Answer

When the price of a product falls, the budget line rotates to the right. This is because the consumer can now afford more of the product with the same budget. The marginal utility may or may not change depending on the consumer's preferences and the extent of the price change. The indifference curve will not necessarily shift as it represents the consumer's preference for a certain combination of goods, and a change in price does not affect the consumer's preference.

If Price of a Product Falls