Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P x . Assume that P = $8, I = 200, and P x = $10.
-If the marginal utility of a product is diminishing relative to the marginal utility of other products, then _____.
A)the consumer is in equilibrium
B)the consumer has been purchasing relatively less of the product
C)the consumer has been purchasing relatively more of the product
D)the price of the product must have increased
E)the price of the product must have decreased

Question

Quizplus · Accepted Answer

When the marginal utility of a product is diminishing relative to the marginal utility of other products, it indicates that the consumer has been purchasing relatively more of the product, leading to a decrease in its additional satisfaction compared to others.

Scenario 5.1 The Demand for Noodles Is Given by the Following Equation