Consider the figure to the right, and suppose that the initial point is A. Explain why a decrease in the price of eachdigital app from $5 to $4 results in a change in the marginal utilities of digital apps in a direction that is consistentwith re-attainment of a new consumer optimum at point B.At A, the marginal utility per dollar spent on appsthe marginal utility per dollar spent onany other item. When the price of apps falls from $5 to $4, the marginal utility per dollar spent on appsThe associated rise in the quantity of apps demanded from 4 to 5themarginal utility of apps. Together, the price and quantity changes cause the marginal utility per dollar spent onapps toconsistent with a new consumer optimum at B.Price per Unit ($ per digital app)10-9-roLO5-32-1-02AB3567Digital Apps per PeriodD81910

The approach proposed in the question is based on consumer theory, namely the Law of Demand and the…

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 $5 to $4 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 the any other item. When the price of apps falls from $5 to $4, the marginal utility per dollar spent on apps The associated rise in the quantity of apps demanded from 4 to 5 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.

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 $5 to $4 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 the any other item. When the price of apps falls from $5 to $4, the marginal utility per dollar spent on apps The associated rise in the quantity of apps demanded from 4 to 5 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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