Table 6.2 Table 6.2 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 6.2.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.

Question

Table 6.2  Table 6.2 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 6.2.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.

Quizplus · Accepted Answer

As income increases, consumers can purchase more goods, which increases their total utility. However, due to the law of diminishing marginal utility, each additional unit of a good consumed provides less additional satisfaction than the previous unit, leading to a decrease in the marginal utilities of the last units consumed.

Table 62 Table 6