Answer to Question #68543 in Microeconomics for usman
In other words, the consumer will be in equilibrium in respect of the quantity of the goods purchased where marginal utility of the goods equals its price. His satisfaction will be maximum only when marginal utility equals price. Thus, the ‘marginal utility equal’s price’ is the condition of equilibrium.
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. It, therefore, follows that the diminishing marginal utility curve implies the downward-sloping demand curve, that is, as the price of the goods falls, more of it will be bought.
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