Rich has $100,000 and Poore has $1,000. Which of these statements is most strongly supported by the theory of consumer choice?
A)An extra dollar given to Rich is worth less to him than his 100,000th dollar.
B)An extra dollar is worth less to Rich than it is to Poore.
C)An extra dollar is worth less to Poore than it is to Rich.
D)Rich's 1,000th dollar is worth more to Rich than Poore's 1,000th dollar is worth to Poore.
E)Rich's 100,000th dollar is worth to Rich exactly what Poore's 1,000th dollar is worth to Poore.

Question

Quizplus · Accepted Answer

An extra dollar given to Rich is worth less to him than his 100,000th dollar. This is because the theory of consumer choice states that the marginal utility of a good decreases as the consumer consumes more of that good.

Rich Has $100,000 and Poore Has $1,000