Bianca consumes pizza.Marginal utility theory predicts that when the price of pizza increases,
A)Bianca's total utility from pizza will increase.
B)Bianca's marginal utility from pizza will not change.
C)Bianca's demand curve for pizza will shift leftward.
D)Bianca will buy less pizza.
E)Bianca will buy more pizza.

Question

Quizplus · Accepted Answer

According to the law of demand, when the price of a good increases, the quantity demanded decreases. Therefore, if the price of pizza increases, Bianca will buy less pizza. This is because the marginal utility of pizza will decrease as she consumes less of it, so the price increase will outweigh the marginal utility she derives from each slice. Her total utility from pizza may not necessarily increase with a price increase, as she may consume less of it overall. Similarly, her marginal utility from pizza may change depending on how much she decides to consume at the new, higher price. The demand curve for pizza may also shift leftward, but this is a longer-term effect caused by changes in consumer preferences and income, not just a price increase.

Bianca Consumes Pizza