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Please help me answer the following questions: True or False please provide an explanation of the answer In fact, marginal utility approach explains the law
Please help me answer the following questions:
True or False please provide an explanation of the answer
- In fact, marginal utility approach explains the law of demand. That is the price and the quantity demanded is inversely related. Substitution effect: as the price of a good falls, consumers substitute now more for that good and less for the other good.(True or False)
- Price in units of utility increases as the consumer is only willing to pay less for the additionally less satisfying consumption. (True or False)
- The extra utility a consumer obtains from the consumption of 1 additional unit of a good or service; equal to the change in total utility divided by the change in the quantity consumed. (True or False)
- Optimum combination means a lower price increases the purchasing power of money income. Thus, enabling a consumer to buy more of a product at a lower price. (True or False)
- A change in either product prices or money income moves the budget line. (True or False)
- Total Utility increases to a maximum point as the marginal utility declines to zero. And then it becomes negative. (True or False)
- Changing the price of one product shifts the budget line and determines a new equilibrium point.(True or False)
- Income effect means that lower prices give an incentive to substitute that lower priced good for another relatively high price good. (True or False)
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