The Principle That Consumers Tend to Buy Less of a Good

question 50

Multiple Choice

The principle that consumers tend to buy less of a good or service when its price increases, all else held equal, is called the law of

• A)preferences.
• B)increasing cost.
• C)demand.
• D)supply.
• E)maximum satisfaction.

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Definitions:

Expected Utility

A theory in economics that calculates the anticipated utility resulting from different outcomes in risky or uncertain situations.

Utility

(Of a consumer) a measure of the satisfaction derived from consumption of goods and services.

Probability

The measurement of the likelihood of a specific event or outcome occurring.

Insurance Premium

The amount of money that an individual or business must pay for an insurance policy.