Suppose that Ms. Jones is currently exhausting her money income by purchasing 4 units of A for $2 a unit and 10 units of B at for $6 a unit. The marginal utility of the last unit of A is 10 utils and of B is 30 utils. These data suggest that Ms. Jones: should keep her purchases as they are. has preferences that are at odds with the principle of diminishing marginal utility. considers A and B to be substitute goods. should buy less A and more B. should buy less B and more A.

Suppose that Ms. Jones is currently exhausting her money income by purchasing 4 units of A for $2 a unit and 10 units of B at for $6 a unit. The marginal utility of the last unit of A is 10 utils and of B is 30 utils. These data suggest that Ms. Jones: should keep her purchases as they are. has preferences that are at odds with the principle of diminishing marginal utility. considers A and B to be substitute goods. should buy less A and more B. should buy less B and more A.

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

Suppose that Ms. Jones is currently exhausting her money income by purchasing 4 units of A for
$2 a unit and 10 units of B at for $6 a unit. The marginal utility of the last unit of A is 10 utils and of
B is 30 utils. These data suggest that Ms. Jones:
should keep her purchases as they are.
has preferences that are at odds with the principle of diminishing marginal utility.
considers A and B to be substitute goods.
should buy less A and more B.
should buy less B and more A.

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Step 1: Understand the Concept of Marginal Utility and Consumer Choice

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Step 2: Analyze Ms. Jones's Current Consumption

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Step 3: Calculate Marginal Utility Per Dollar for Goods A and B

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Step 4: Conclude Based on Marginal Utility Analysis

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