A Consumer Will Buy a New Product Rather Than an Existing

question 142

Multiple Choice

A consumer will buy a new product rather than an existing product

• A)when the MU/P of the new product is less than the MU/P of the existing product.
• B)when the substitution of the new product for the old product increases the consumer's total utility.
• C)only if the new product has a lower price than the existing product.
• D)only if the MU of the new product exceeds the MU of the existing product.

---

Definitions:

Supply

The total amount of a good or service available for purchase at any given price level, within a specified period.

Law of Demand

A fundamental economic principle stating that as the price of a product decreases, demand for it usually increases, and vice versa.

Surpluses

Situations in which the quantity of a good or service supplied exceeds the quantity demanded at the current price.

Market Prices

Refers to the specific values at which commodities, securities, or services are traded in a competitive marketplace.