Which of the following statements is TRUE?
A) Marginal utility theory predicts that an increase in a consumer's income increases consumption of all goods.
B) It is possible to derive the law of demand-that a higher price decreases the quantity demanded-using marginal utility theory.
C) Marginal utility theory makes no prediction about a consumer's responses to hikes in the prices of the goods and services he or she consumes.
D) Marginal utility theory predicts that all goods are normal goods and that all goods are substitutes for each other.

Question

Quizplus · Accepted Answer

Marginal utility theory can be used to derive the law of demand by showing that as the price of a good increases, the marginal utility per dollar spent on that good decreases, leading consumers to buy less of it.

Which of the Following Statements Is TRUE