Assume that product Alpha and product Beta are both priced at $1 per unit and that Ellie has $20 to spend on Alpha and Beta. She buys 8 units of Alpha and 12 units of Beta. The marginal utilities of the last unit of Alpha and Beta that she purchases are 40 utils and 20 utils, respectively. This indicates that
A. Ellie should make no change in consumption.
B. in order to maximize utility, Ellie should buy more Beta and less Alpha.
C. in order to maximize utility, Ellie should buy more Alpha and less Beta.
D. given another dollar, Ellie should buy an additional unit of Beta.
Answer: C
You might also like to view...
When several resources are combined in the production of a good,
a. it is easy to determine the marginal products of the various resources b. the marginal contribution of each input often cannot be observed c. allocating revenue among the various resources is easy d. there is more competition for each of the resources used e. there is less competition for each of the resources used
If a monopolistically competitive firm's demand curve is shifting left, it will stop shifting only when:
A. the firm raises its price. B. firms stop leaving the industry. C. the firm lowers its price. D. firms stop entering the industry.