Table 10-2

Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods.
-Refer to Table 10-2.Holding prices constant, when Keira's income changed from $18 to $23, what happens to her total utility and to the marginal utilities of the last cup of soup and the last sandwich purchased?
A)Her total utility increases but the marginal utilities of the last cup of soup and the last sandwich consumed decrease.
B)Her total utility, the marginal utility of the last cup of soup consumed, and the marginal utility of the last sandwich consumed all increase.
C)Her total utility decreases but the marginal utilities of the last cup of soup and the last sandwich consumed increase.
D)Her total utility and the marginal utility of the last cup of soup consumed increase but marginal utility of the last sandwich consumed decreases.
E)Her total utility and the marginal utility of the last sandwich consumed increase but marginal utility of the last cup of soup consumed decreases.

Question

Table 10-2
  
Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods.
-Refer to Table 10-2.Holding prices constant, when Keira's income changed from $18 to $23, what happens to her total utility and to the marginal utilities of the last cup of soup and the last sandwich purchased?
A)Her total utility increases but the marginal utilities of the last cup of soup and the last sandwich consumed decrease. 
B)Her total utility, the marginal utility of the last cup of soup consumed, and the marginal utility of the last sandwich consumed all increase. 
C)Her total utility decreases but the marginal utilities of the last cup of soup and the last sandwich consumed increase. 
D)Her total utility and the marginal utility of the last cup of soup consumed increase but marginal utility of the last sandwich consumed decreases. 
E)Her total utility and the marginal utility of the last sandwich consumed increase but marginal utility of the last cup of soup consumed decreases.

Quizplus · Accepted Answer

When Keira's income increases, she can consume more goods, leading to an increase in her total utility. However, as she consumes more of each good, the marginal utility of the last unit of each good typically decreases due to the law of diminishing marginal utility.

Table 10-2 Table 10-2 Above Shows Keira's Utility from Soup and Sandwiches