If Ewan is consuming his utility maximizing bundle and the price of one good falls, what happens to the marginal utility per dollar spent on this good (MU/P), and what should Ewan do?
A)MU/P has increased and Ewan should buy more of this good.
B)MU/P has increased and Ewan should buy less of this good.
C)MU/P has decreased and Ewan should buy more of this good.
D)MU/P has decreased and Ewan should buy less of this good.

Question

Quizplus · Accepted Answer

When the price of one good falls, the MU/P for that good increases. This means that Ewan now gets more satisfaction per dollar spent on this good. Therefore, Ewan should buy more of this good to increase his total utility.

If Ewan Is Consuming His Utility Maximizing Bundle and the Price