Patty spends $10 a week on bagels and soda. The price of a bagel is $2 and the price of soda is $1 a can. Patty buys 2 bagels and 6 cans of soda. Her marginal utility from bagels is 20 units. The price of a bagel rises to $3 and the price of a can of soda rises to $1.50. Patty now buys ________ bagels and her marginal utility from bagels ________. She buys ________ cans of soda and her marginal utility from soda ________.
A) fewer than 2; increases; fewer than 6; increases
B) 2; is 20 units; 6; is 10 units
C) fewer than 2; is 20 units; fewer than 6; is 10 units
D) fewer than 2; decreases; fewer than 6; decreases

Question

Quizplus · Accepted Answer

When prices increase, Patty will likely buy fewer bagels and sodas, leading to an increase in marginal utility for both as she consumes less of each.

Patty Spends $10 a Week on Bagels and Soda