Question

Lower prices increase the marginal utility per dollar spent and cause consumers to buy more of a good. On the other hand, higher prices lower the marginal utility per dollar spent and cause consumers to buy less of a good. This is a way of restating ________ in terms of marginal utility.

Answer 1

Answer: Law of Demand.

Step-by-step explanation:

Law of demand states that as the price of a commodity increases, as a result demand for that commodity decreases and as the price of a commodity decreases, as a result demand for that commodity increases. This shows that there is a inverse relationship between the price and demand of a commodity.

Lower prices increase the marginal utility per dollar spent because lower price increases the purchasing of a consumer and hence increases the satisfaction level.

It is a different of restating law of demand in terms MU.