McqMate
| Q. |
The Marginal Utility Curve slopes downward from left to right indicating - |
| A. | A direct relationship between marginal utility and the stock of commodity |
| B. | A constant relationship between marginal utility and the stock of commodity |
| C. | A proportionate relation-ship between marginal utility and the stock of commodity |
| D. | An inverse relationship between marginal utility and the stock of commodity |
| Answer» D. An inverse relationship between marginal utility and the stock of commodity | |
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Explanation: The Marginal Utility Curve is a curve illustrating the relation between the marginal utility obtained from consuming an additional unit of good and the quantity of the good consumed. The negative slope of the marginal utility curve reflects the law of diminishing marginal utility. The marginal utility curve also can be used to derive the demand curve. Marginal Utility is the utility derived from the last unit of a commodity purchased. One of the earliest explanations of the inverse relationship between price and quantity demanded is the law of diminishing marginal utility. This law suggests that as more of a product is consumed the marginal (additional) benefit to the consumer falls; hence consumers are prepared to pay less. |
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