When Homer has 5 doughnuts,his marginal value is 15¢ per doughnut.We can conclude that Homer
A) places a value of 3¢ on each doughnut he owns.
B) needs to purchase more than 5 doughnuts to reach his optimum.
C) receives 75¢ worth of total satisfaction from his 5 doughnuts.
D) would refuse to pay more than 15¢ for a sixth doughnut.

Question

Quizplus · Accepted Answer

Marginal value is the additional utility or satisfaction gained from consuming one more unit of a good or service. Therefore, if Homer's marginal value for a doughnut is 15¢, this means that he is willing to pay up to 15¢ for an additional doughnut. If he already has 5 doughnuts, it implies that he has reached his optimum for now, as he is not willing to pay more than 15¢ for a sixth doughnut, so the answer is D.

When Homer Has 5 Doughnuts,his Marginal Value Is 15¢ Per