When a consumer shifts purchases from product X to product Y, the marginal utility of
A)X falls and the marginal utility of Y rises.
B)X rises and the marginal utility of Y falls.
C)both X and Y rises.
D)both X and Y falls.

Question

Quizplus · Accepted Answer

When a consumer shifts purchases from product X to product Y, it implies that the last unit of X consumed was providing less satisfaction compared to what the consumer now expects to gain from Y. Therefore, the marginal utility of X rises because the consumer is consuming less of X, making each unit of X more valuable. Conversely, the marginal utility of Y falls because the consumer is consuming more of Y, making each additional unit of Y less valuable.

When a Consumer Shifts Purchases from Product X to Product