ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the marginal utility a person gets from consuming a good determines their demand for the good.
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the total utility a person gets from consuming a good determines their demand for the good.
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the marginal utility a person gets from consuming a good determines their market demand for the good.
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the total utility a person gets from consuming a good determines their market demand for the good.
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Detailed explanation-1: -Law of Demand The price a consumer is willing to pay for a good depends on its marginal utility, which declines with each additional unit of consumption, according to the law of diminishing marginal utility. Therefore, the price decreases for a normal good when consumption increases.
Detailed explanation-2: -The relationship between total utility and marginal utility indicates that when marginal utility decreases, total utility increases at a decreasing rate, and when total utility is at a maximum point, marginal utility is zero and total utility starts to decline if marginal utility is negative.
Detailed explanation-3: -Demand is an economic principle referring to a consumer’s desire for a particular product or service. Utility function describes the amount of satisfaction a consumer receives from a particular product or service.
Detailed explanation-4: -The law of diminishing marginal utility applies to business in that it is closely connected to the law of demand. That law states that as price decreases, consumption increases and that as price increases, consumption decreases.