Question

The law of diminishing marginal utility suggeststhat A) Price and quantity demanded are directly related. B) People will substitute lower-priced goods for more expensive goods, ceteris paribus. C) As marginal utility decreases, the willingness to pay increases. D) People are willing to buy additional quantities of a good only if its price falls.

Answer 1

Answer:

D) People are willing to buy additional quantities of a good only if its price falls.

Explanation:

Marginal utility is the additional satisfaction that a person gets from consumption of an extra unit of a product.

Diminishing marginal utility states that as more units of a good is consumed the satisfaction derived reduces.

Since people are less satisfied with consumption, they are less willing to to pay for more.

However if the price of the good falls people will now be more willing to buy as they are spending less on a product they are less satisfied with.