Kathleen likes avocado and crab dip. After eating avocado and crab dip with four crackers, she switches to cheese with crackers. We can conclude that
A) the avocado and crab dip cannot have tasted that good.
B) the avocado and crab dip with crackers now has a marginal utility of zero.
C) at this point cheese and crackers have a higher marginal utility per dollar spent than that of avocado and crab dip with crackers.
D) Kathleen is no longer maximizing her utility.

Question

Quizplus · Accepted Answer

Marginal utility refers to the additional satisfaction or utility that a person receives from consuming an additional unit of a good or service. When Kathleen switches from avocado and crab dip with crackers to cheese with crackers, it suggests that, at that moment, cheese and crackers offer her a higher marginal utility per dollar spent than the avocado and crab dip with crackers. This is because consumers will typically choose to consume the good that provides the highest marginal utility per dollar spent, assuming rational behavior aimed at maximizing utility.

Kathleen Likes Avocado and Crab Dip