Other things remaining the same,marginal utility theory implies that a rise in the price of a good
A)increases the consumer surplus.
B)decreases the consumer surplus.
C)leaves consumer surplus unchanged.
D)has an effect on consumer surplus that cannot be determined.
E)decreases consumer surplus by the amount equal to the total utility of all goods consumed before the price rise but not after the price rise.

Question

Quizplus · Accepted Answer

According to the Law of Diminishing Marginal Utility, as the price of a good rises, the quantity demanded decreases. This means that the consumer will have to pay a higher price for a smaller amount of the good, leading to a decrease in consumer surplus. Therefore, choice B is correct.

Other Things Remaining the Same,marginal Utility Theory Implies That a Rise