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

question 64

Multiple Choice

Marginal utility analysis predicts a downward-sloping demand curve for good X because

• A)as P_X falls,the ratio MU_X/P_X becomes smaller,causing the consumer to purchase more of good X.
• B)as P_X rises,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.

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Definitions:

Trial Balance

A tabulation for accounting purposes where all ledger balances are gathered, displaying equal totals in both debit and credit sections.

T Accounts

A visual representation used in accounting to depict the debit and credit sides of accounts, helping to track and manage financial transactions.

Account Affected

The specific ledger account impacted by a financial transaction, indicating where changes in value are recorded.

Debit and Credit

Accounting terms used to record transactions in the accounts, where debits increase asset or expense accounts and decrease liability, equity, or revenue accounts, and credits do the opposite.