We know with certainty that a consumer will buy a newly introduced product rather than an existing product when the
A)MU/P of the new product exceeds the MU/P of the existing product.
B)price of the new product is less than the price of the existing product.
C)MU of the new product is more than the MU of the existing product.
D)law of diminishing marginal utility applies to the existing product.

Question

Quizplus · Accepted Answer

The marginal utility per dollar (MU/P) is a measure of the additional satisfaction a consumer gets from consuming one more unit of a good, divided by the price of that good. If the MU/P of the new product exceeds the MU/P of the existing product, then the consumer will get more satisfaction from consuming the new product, even if it is more expensive.

We Know with Certainty That a Consumer Will Buy a Newly