Question

In general, as the price of a good falls, the consumer buys: more of the good...

In general, as the price of a good falls, the consumer buys:

more of the good and the marginal utility falls.

less of the good and the marginal utility falls.

more of the good and the total utility falls.

less of the good and the total utility rises.
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Answer #1

Ans:-In general, as the price of a good falls, the consumer buys

(a) more of the good and the marginal utility falls.

According to the diminishing marginal utility, when the price of a good falls the marginal utility curve moves downward as consumer increase their purchasing power of that particular good. As long as the marginal utility of each additional unit of good is higher than the price, consumer will keep buying more and more of the good. Marginal utility is always compared by consumers when they consume additional good after falling the cost of the good and the cost they had to pay before the price drop where marginal utility would have been lower than the price. .

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