As price falls along a given demand curve for pretzels,
A)quantity demanded, total utility, marginal utility, and consumer surplus increase; consumer expenditure decreases
B)quantity demanded, total utility, and consumer surplus increase; marginal utility and consumer surplus decrease
C)quantity demanded, total utility, consumer surplus, and consumer expenditure increase; marginal utility decreases
D)quantity demanded, total utility, and consumer surplus increase; marginal utility decreases; consumer expenditure might increase, decrease, or remain constant
E)quantity demanded, total utility, marginal utility, consumer surplus, and consumer expenditure all increase

Question

Quizplus · Accepted Answer

As price falls along a given demand curve for pretzels, quantity demanded, total utility, and consumer surplus increase. This is because as the price falls, consumers are willing and able to buy more pretzels, gaining more utility and surplus. However, marginal utility decreases because as consumers buy more pretzels, the additional utility gained from each additional pretzel decreases. Consumer expenditure might increase, decrease, or remain constant depending on how much the quantity demanded increases and how much the price falls.

As Price Falls Along a Given Demand Curve for Pretzels