Marginal utility analysis predicts a downward-sloping demand curve for good X because A)as P_Xfalls,the ratio MU_X/P_X becomes smaller,causing the consumer to purchase more of good X. B)as P_Xrises,the consumer increases purchases of X such that MU_X/P_X is equal to MU/P for all other products. C)utility-maximizing consumers equate marginal utility received for each product consumed. D)all demand curves are downward sloping,regardless of the behaviour of consumers. E)as P_X falls,the consumer increases purchases of X until MU_X/P_X is equal to MU/P for all other products.

Question

Quizplus · Accepted Answer

As the price of good X falls, consumers will purchase more of it until the marginal utility per dollar spent on X equals the marginal utility per dollar spent on other goods, leading to a downward-sloping demand curve.

Marginal Utility Analysis Predicts a Downward-Sloping Demand Curve for Good