Asked by Kathleen Hoang on May 19, 2024
Verified
A consumer's demand curve for a product is downsloping because
A) total utility falls below marginal utility as more of a product is consumed.
B) marginal utility diminishes as more of a product is consumed.
C) time becomes less valuable as more of a product is consumed.
D) the income and substitution effects precisely offset each other.
Marginal Utility
The additional satisfaction or usefulness gained from consuming one more unit of a good or service.
Income Effect
is the change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service.
Substitution Effect
The change in consumption patterns due to a change in relative prices, leading consumers to replace more expensive items with less expensive ones.
- Acquire knowledge about the principle of diminishing marginal utility and its impact on consumer demand.
- Acquire knowledge on the derivation of the demand curve through diminishing marginal utility.
Verified Answer
SC
Sapna ChandanMay 25, 2024
Final Answer :
B
Explanation :
The law of diminishing marginal utility explains why the demand curve is downsloping; as more of a product is consumed, the additional satisfaction (marginal utility) gained from consuming one more unit decreases.
Learning Objectives
- Acquire knowledge about the principle of diminishing marginal utility and its impact on consumer demand.
- Acquire knowledge on the derivation of the demand curve through diminishing marginal utility.