AP Microeconomics

Category - Microeconomics

If the price of a particular good is zero, a consumer of the good will consume until the total utility reaches zero. True or false?
  1. True
  2. False
Explanation
Answer - B - This is false.

Key Takeaway: The consumer will consume all units of the good with positive marginal utility. Remember that utility is typically discussed within the context of the law of diminishing marginal utility. This law states that as a person gains more of one particular item, that person will have less satisfaction (or utility) from obtaining that one more unit. In this case, if a good is priced at nothing, the consumer will continue to consume until their enjoyment or satisfaction falls.
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