Question

If a consumer is currently maximizing her satisfaction, what will happen to the marginal utility of a good when its price increases and the consumer adjusts consumption accordingly? The marginal utility will __________.

Answer 1

Answer:

If a consumer is currently maximizing her satisfaction, what will happen to the marginal utility of a good when its price increases and the consumer adjusts consumption accordingly? The marginal utility will increase.

Explanation:

The price that a client accepts to pay for a good is determined by his/her marginal utility, which decreases as the person adds another unit of consumption, as the law of diminishing marginal utility indicates. In this case, the marginal utility will increase since the consumer will consume less of the good.