Sam always tries to maximize his utility in his consumption of popcorn and soft drinks.Both of these goods are subject to diminishing marginal utility.Suppose the prices of these goods,along with Sam's budget (and spending)for these items,stay the same,but Sam decides to decrease his consumption of popcorn.Holding everything else constant,this means that Sam must _____ his consumption of soft drinks,and his marginal utility per dollar spent on popcorn will be _____ than it used to be.
A)increase;greater
B)decrease;greater
C)increase;less
D)decrease;less

Question

Quizplus · Accepted Answer

If Sam decreases his consumption of popcorn, he will have more money left over in his budget. Since the prices and budget for soft drinks and popcorn stay the same, this means that Sam can increase his consumption of soft drinks. By doing so, his marginal utility per dollar spent on popcorn will be greater because he is now allocating more of his budget towards soft drinks, thereby increasing the marginal utility per dollar spent on popcorn.

Sam Always Tries to Maximize His Utility in His Consumption