Asked by Sheryl Kambuni on May 19, 2024
Verified
Other things equal, an increase in the price of product A will
A) increase the marginal utility per dollar spent on A.
B) decrease the marginal utility per dollar spent on A.
C) not affect the marginal utility per dollar spent on A.
D) cause utility-maximizing consumers to buy more of A.
Marginal Utility Per Dollar
The additional satisfaction obtained from spending one more dollar on a good or service.
- Gain insight into how shifts in pricing impact the marginal utility and choices made by consumers.
Verified Answer
KW
Kayla WilliamsMay 21, 2024
Final Answer :
B
Explanation :
An increase in the price of product A decreases the marginal utility per dollar spent on A because consumers get less utility for each dollar spent on the now more expensive product A, leading them to adjust their consumption to maximize utility.
Learning Objectives
- Gain insight into how shifts in pricing impact the marginal utility and choices made by consumers.