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Chapter 6: Problem 14

The demand curve is downward sloping because of the law of a. diminishing marginal utility. b. diminishing consumer equilibrium. c. consumer equilibrium. d. diminishing utility maximization.

Short Answer

Expert verified
The correct answer is (a) - the demand curve is downward sloping because of the law of diminishing marginal utility. This law states that as a consumer consumes more of a good, the additional satisfaction (marginal utility) they derive from consuming an additional unit of the good decreases, which results in a downward sloping demand curve.

Step by step solution

01

Understand the concept of the demand curve

The demand curve is a graphical representation of the relationship between the quantity of a good demanded by consumers and its price. It usually slopes downward, which means that as the price of the good increases, the quantity demanded by consumers decreases, and vice versa.
02

Evaluate option a

Option (a) states that the demand curve is downward sloping because of the law of diminishing marginal utility. The law of diminishing marginal utility states that as a consumer consumes more of a good, the additional satisfaction (marginal utility) they derive from consuming an additional unit of the good decreases. This implies that consumers are willing to pay less for additional units of a good, which can help explain the downward sloping demand curve.
03

Evaluate option b

Option (b) mentions the law of diminishing consumer equilibrium. However, there is no such law in economics. Consumer equilibrium is a condition where a consumer allocates their spending in a way that they maximize their satisfaction or utility.
04

Evaluate option c

Option (c) refers to consumer equilibrium, as mentioned in step 3. Although consumer equilibrium is related to the overall allocation of a consumer's spending, it does not directly explain why the demand curve is downward sloping.
05

Evaluate option d

Option (d) talks about diminishing utility maximization, which is not an established concept in economics. The closest concept to this would be 'utility maximization,' where a consumer tries to maximize their satisfaction from consuming goods and services. However, utility maximization does not directly explain why the demand curve is downward sloping.
06

Identify the correct answer

Based on our evaluation of each option, we can conclude that the correct answer is option (a) - the demand curve is downward sloping because of the law of diminishing marginal utility.

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Most popular questions from this chapter

A state of consumer equilibrium for goods consumed prevails when the a. marginal utility of all goods is the same for the last dollar spent for each good. b. marginal utility per dollar's worth of two goods is the same for the last dollar spent for each good. c. price of two goods is the same for the last dollar spent for each good. d. marginal cost per dollar spent on two goods is the same for the last dollar spent for each good.

Assume that a person's consumption of just the right amounts of pork and chicken is in equilibrium. We can conclude that the a. marginal utility of pork must equal the marginal utility of chicken. b. price of pork must equal the price of chicken. V c. ratio of marginal cost to price must be the same in both the pork and the chicken markets. d. ratio of marginal utility to price must be the same for pork and chicken.

Suppose an individual consumes pizza and cola. To reach consumer equilibrium, the individual must consume pizza and cola so that the a. price paid for the two goods is the same. b. marginal utility of the two goods is equal. c. ratio of marginal utility to price is the same for both goods. d. ratio of the marginal utility of cola to the marginal utility of pizza is 1

The total utilities associated with the first 5 units of consumption of good \(X\) are \(15,30,40,47,\) and \(50,\) respectively. What is the marginal utility associated with the third unit? a. 15 b. 70 c. 85 d. 10 e. 45

The amount of added utility that a consumer gains from the consumption of one more unit of a good is called a. incremental utility. b. total utility. c. diminishing utility. d. marginal utility.
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