Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda
A) will increase and she'll buy more soda.
B) will decrease and she'll buy fewer sodas.
C) will decrease and she'll buy more pizza.
D) Both B and C are correct.

Question

Quizplus · Accepted Answer

The increase in the price of soda will make it relatively more expensive compared to pizza. As a result, Jean will substitute away from soda and towards pizza. This means that her marginal utility per soda will decrease and she will buy fewer sodas.

Suppose the Price of Soda Is $2 Each and the Price