If the price of a product rises, consumers buy less of the good because the:
A) MU/P of the good falls below the MU/P of other goods.
B) MU/P of the good rises above the MU/P of other goods.
C) marginal utility of the good rises.
D) total utility of the good diminishes.

Question

Quizplus · Accepted Answer

When the price of a product rises, the marginal utility per price (MU/P) of that good decreases relative to the MU/P of other goods. This means that consumers will switch to purchasing other goods that provide more satisfaction per dollar. Therefore, they will buy less of the good that has become more expensive.

If the Price of a Product Rises, Consumers Buy Less