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Question
Lower prices increase the marginal utility per dollar spent and cause consumers to buy more of a good. On the other hand, higher prices lower the marginal utility per dollar spent and cause consumers to buy less of a good. This is a way of restating ________ in terms of marginal utility.
a. diminishing marginal utility
b. satisfaction
c. the law of demand
d. the law of supply
e. the real-income effect
Answer
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Related questions
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Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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