Other things held equal, demand curves slope downward because: multiple choicean increase in a product's price lowers MU.a decrease in a product's price lowers MU.a decrease in a product's price raises MU per dollar and makes consumers wish to purchase more units.an increase in a product's price raises MU per dollar and makes consumers wish to purchase more units.
Question
Other things held equal, demand curves slope downward because: multiple choicean increase in a product's price lowers MU.a decrease in a product's price lowers MU.a decrease in a product's price raises MU per dollar and makes consumers wish to purchase more units.an increase in a product's price raises MU per dollar and makes consumers wish to purchase more units.
Solution
The correct answer is: a decrease in a product's price raises MU per dollar and makes consumers wish to purchase more units.
Here's why:
The term MU refers to Marginal Utility, which is the additional satisfaction a consumer gains from consuming one more unit of a good or service.
When the price of a product decreases, consumers get more utility (satisfaction) for each dollar they spend on the product. This is because they are now able to purchase more units of the product with the same amount of money. As a result, the marginal utility per dollar increases, making consumers want to buy more units.
This is in line with the law of demand, which states that, all else being equal, as the price of a product decreases, the quantity demanded increases. Hence, demand curves slope downward.
Similar Questions
Holding all other factors constant, consumers demand more of a good theGroup of answer choiceshigher its price.lower its price.steeper the downward slope of the demand curve.steeper the upward slope of the demand curve.
The change in price that results from a rightward shift in demand will be greater ifGroup of answer choicesthe supply curve is horizontal than if the supply curve is upward sloping.the supply curve is relatively steep than if the supply curve is relatively flat.the supply curve is upward sloping than if the supply curve is vertical.the supply curve is horizontal than if the supply curve is vertical.
If the demand curve for a good is horizontal and the price is positive, then a leftward shift of the supply curve results inGroup of answer choicesa price of zero.an increase in price.a decrease in price.no change in price.
When a demand curve shifts to the rightMultiple Choicedemand has increased, so equilibrium price increases, and equilibrium quantity increases.demand has decreased, so equilibrium price decreases, and equilibrium quantity decreases.demand has increased, so supply also shifts to the right, and the equilibrium price increases.demand has decreased, so supply also shifts to the right, and the equilibrium price decreases.
Q1+1The slope of a demand curve depends onChoose one optionneither the units used to measure price nor the units used to measure quantitythe units used to measure price and the units used to measure quantitythe units used to measure price but not the units used to measure quantitythe units used to measure quantity but not the units used to measure price
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.