Read the two statements and choose the correct option.
I. The law of diminishing marginal utility explains why a demand curve slopes downward.
II. The law of diminishing marginal utility applies to money as well, in cardinal analysis.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

I is true: because each extra unit is worth less, a consumer buys more only at a lower price.
II is false: cardinal analysis assumes the marginal utility of money stays constant.

Ten questions from Utility & Consumer's Equilibrium, at your own pace.

Ten questions from Utility & Consumer's Equilibrium, at your own pace.

Read the two statements and choose the correct option.I. The law of diminishing marginal utility explains why a demand curve slopes downward.II. The law of diminishing marginal utility applies to money as well, in cardinal analysis.