Consider the figure to the right, and suppose that the initial point is A. Explain why a decrease in the price of each digital app from $3 to $2 results in a change in the marginal utilities of digital apps in a direction that is consistent with re-attainment of a new consumer optimum at point B. At A, the marginal utility per dollar spent on apps the marginal utility per dollar spent on any other item. When the price of apps falls from $3 to $2, the marginal utility per dollar spent on apps The associated rise in the quantity of apps demanded from 6 to 7 the marginal utility of apps. Together, the price and quantity changes cause the marginal utility per dollar spent on apps to consistent with a new consumer optimum at B. Price per Unit ($ per digital app) 10- 9- 1- 0- 0 1 2 A B 3 4 Digital Apps per Period D 8 9 10 Q ON

Consider the figure to the right, and suppose that the initial point is A. Explain why a decrease in the price of each digital app from $3 to $2 results in a change in the marginal utilities of digital apps in a direction that is consistent with re-attainment of a new consumer optimum at point B. At A, the marginal utility per dollar spent on apps the marginal utility per dollar spent on any other item. When the price of apps falls from $3 to $2, the marginal utility per dollar spent on apps The associated rise in the quantity of apps demanded from 6 to 7 the marginal utility of apps. Together, the price and quantity changes cause the marginal utility per dollar spent on apps to consistent with a new consumer optimum at B. Price per Unit ($ per digital app) 10- 9- 1- 0- 0 1 2 A B 3 4 Digital Apps per Period D 8 9 10 Q ON

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consider the figure to the right, and suppose that the initial point is A. Explain why a
decrease in the price of each digital app from $3 to $2 results in a change in the marginal
utilities of digital apps in a direction that is consistent with re-attainment of a new consumer
optimum at point B.
At A, the marginal utility per dollar spent on apps
the marginal utility
per dollar spent on any other item. When the price of apps falls from $3 to $2, the
marginal utility per dollar spent on apps
▼ The associated rise in the
quantity of apps demanded from 6 to 7
the marginal utility of apps.
Together, the price and quantity changes cause the marginal utility per dollar spent on
apps to
consistent with a new consumer optimum at B.
Price per Unit ($ per digital app)
10-
9-
1-
0
2
B
3
6
4
Digital Apps per Period
D
8
9
10
Q

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