If a commodity has a high marginal utility, its market price will be
ECONOMICS
WAEC 2013
If a commodity has a high marginal utility, its market price will be
- A. stable
- B. high
- C. zero
- D. constant
Correct Answer: C. zero
Explanation
The price a consumer is willing to pay for a good depends on his marginal utility, which declines with each additional unit of consumption. The price decreases for a normal good when consumption increases. A good with a high marginal utility will have a zero market price. For example,water has a higher MU than gold, but gold cost more than water. The higher the utility, the lower the price
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