If the marginal utility of a good is constant, what impact will a decrease in the price have on the consumption of that good?
A) It will increase the total utility as consumers purchase less of the good.
B) It will increase the marginal utility per dollar spent, and a consumer will purchase more of the good.
C) It will decrease the marginal utility per dollar spent, and a consumer will purchase less of the good.
D) It will decrease the total utility as consumers purchase more of the good.

Question

Quizplus · Accepted Answer

When the price of a good decreases, the marginal utility per dollar spent on that good increases. This means that consumers can get more utility per dollar spent, and they are more likely to purchase more of the good. This holds true for goods with constant marginal utility as well. Therefore, the correct answer is B.

If the Marginal Utility of a Good Is Constant, What