Suppose Katy Lucus maximized her total utility by buying different quantities of a variety of goods. Now suppose the price of one good rises. She then buys less of thatgood because the
A) MU/P of that good falls below the MU/P of other goods
B) MU/P of that good rises above the MU/P of other goods
C) marginal utility of that good diminishes
D) total utility of that good diminishes
E) marginal utility of that good rises

Question

Quizplus · Accepted Answer

When the price of a good rises, the marginal utility per dollar (MU/P) of that good falls below the MU/P of other goods, leading consumers like Katy to buy less of it in order to maximize their total utility.

Suppose Katy Lucus Maximized Her Total Utility by Buying Different