Question

According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because

A) the good is now perceived as having higher quality.

b) substitutes are relatively more expensive.

c) the marginal benefit of additional units of the good now outweigh the marginal cost.

d) consumers' real income has increased.

Answer 1

Answer) According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because the marginal benefit of additional units of the good now outweighs the marginal cost.

The Law of Diminishing Marginal Utility asserts that the extra utility earned from a rise in consumption declines with each successive increase in the level of consumption.

Hence option C is the correct answer.

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