Other things equal, an increase in the price of product A will
A)increase the marginal utility per dollar spent on A.
B)decrease the marginal utility per dollar spent on A.
C)not affect the marginal utility per dollar spent on A.
D)cause utility-maximizing consumers to buy more of A.

Question

Quizplus · Accepted Answer

An increase in the price of product A decreases the marginal utility per dollar spent on A because consumers get less utility for each dollar spent on the now more expensive product A, leading them to adjust their consumption to maximize utility.

Other Things Equal, an Increase in the Price of Product