Assume the graph shown represents Dawn's budget constraint.If Dawn's income to spend on these two items increased and Dawn spends all her income on these two goods,then Dawn's total utility from consuming these two goods:
A) will likely go up, since she can afford more of both goods now.
B) will likely go down, since her marginal utility of additional items decreases the more she consumes.
C) will likely go down, since she is probably sick of these two things already.
D) will likely go up, since her marginal utility of additional items increases the more she consumes.

Question

Assume the graph shown represents Dawn's budget constraint.If Dawn's income to spend on these two items increased and Dawn spends all her income on these two goods,then Dawn's total utility from consuming these two goods:
A) will likely go up, since she can afford more of both goods now. 
B) will likely go down, since her marginal utility of additional items decreases the more she consumes. 
C) will likely go down, since she is probably sick of these two things already. 
D) will likely go up, since her marginal utility of additional items increases the more she consumes.

Quizplus · Accepted Answer

Dawn's budget constraint shows that she is currently consuming a combination of the two goods that maximizes her total utility given her income. If her income increases, she can afford more of both goods, which means that she can move to a higher indifference curve and increase her total utility. Therefore, her total utility from consuming these two goods will likely go up if her income increases.

Assume the Graph Shown Represents Dawn's Budget Constraint