Q200
Diminishing marginal utility is the basis of
A.
Law of supply
B.
Law of demand
AnswerC.
Law of returns
D.
None of the above
Answer: Option B
Solution
Answer: Option B
Solution:
Diminishing marginal utility is the basis of Law of demand. When the price of a goods falls, downward sloping marginal utility curve implies that the consumers must buy more of the good so that its marginal utility falls and becomes equal to the new price.