Assume that a consumer is currently maximizing satisfaction and buying popcorn and apple pies. If the price of popcorn increases, what will happen to the marginal utilities of popcorn and apple pies once the consumer adjusts to the new price of popcorn? The marginal utility of popcorn will and the marginal utility of apple pies will Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a increase; decrease b increase; increase decrease; decrease d decrease; increase e decrease; not change
Assume that a consumer is currently maximizing satisfaction and buying popcorn and apple pies. If the price of popcorn increases, what will happen to the marginal utilities of popcorn and apple pies once the consumer adjusts to the new price of popcorn? The marginal utility of popcorn will and the marginal utility of apple pies will Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a increase; decrease b increase; increase decrease; decrease d decrease; increase e decrease; not change
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:**Homework Question: Marginal Utility Adjustment**
**Question:**
Assume that a consumer is currently maximizing satisfaction and buying popcorn and apple pies. If the price of popcorn increases, what will happen to the marginal utilities of popcorn and apple pies once the consumer adjusts to the new price of popcorn?
The marginal utility of popcorn will ____________ and the marginal utility of apple pies will _____________.
**Options:**
a) increase; decrease
b) increase; increase
c) decrease; decrease
d) decrease; increase
e) decrease; not change
**Selected Answer:**
a) increase; decrease
**Explanation:**
This question explores the concept of marginal utility in the context of price changes. If the price of popcorn increases, the consumer will generally buy less popcorn, which will increase its marginal utility according to the law of diminishing marginal utility. Consequently, if the consumer substitutes apple pies for the now more expensive popcorn, the marginal utility of apple pies will decrease as the consumer consumes more of them.
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