Question

Customers are usually more willing to pay more for the first unit of a good they purchase than for the​ second, third, or subsequent units. This implies that

A. firms are using nonminuslinear price discrimination.
B. typical consumers are irrational.
C. typical consumers have a downward sloping demand curve.
D. firms are unable to determine their​ customers' reservation prices.

Answer 1

Answer: Option C

Explanation: The given case, illustrates the law of diminishing marginal utility. As per this law, as the consumer consumes more and more of goods the marginal utility from every additional unit tends to decrease.

This makes the demand curve of the individual, slope downward. As the utility satisfaction decreases the price consumer willing to pay decreases .

Hence from the above we can conclude that the correct option is C.