Question

If the price of good A​ falls, then when the consumer makes his new​ utility-maximizing choice​ _______. A. the quantity of the good A consumed will decrease B. the marginal utility from consuming good A will be lower than before C. the marginal utility from all other goods will be lower than before D. the quantity consumed of all other goods will increase

Answer 1

Answer: Option (B) is correct.

Explanation:

Correct option: The marginal utility from consuming good A will be lower than before.

This due to the law of diminishing marginal utility. When the price of good A falls as result consumer will buy more quantity of good A. But according to the  law of diminishing marginal utility, as the consumers consumes more and more quantity of good, the utility derived from an additional unit goes on diminishing.

Therefore, the marginal utility from consuming good A will be lower than before.