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:

Invested

Dispensing capital with the plan of creating income or profit.

Days

Time period measured in units of 24 hours.

Investment

asset or item acquired with the goal of generating income or appreciation.

Interest

The cost of borrowing money, typically expressed as an annual percentage of the loan amount, or the income earned on deposited funds.