Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P x . Assume that P = $8, I = 200, and P x = $10.
-The prices that people are willing to pay for goods and services mostly depend on:
A)the total utility derived from the goods and services.
B)the marginal utility derived from the goods and services.
C)the availability of raw materials for producing the goods and services.
D)the cost of producing the goods and services.
E)whether the goods are legal, since the laws affect the position of both supply and demand curves.

Question

Quizplus · Accepted Answer

The prices that people are willing to pay for goods and services mostly depend on the marginal utility derived from the goods and services. In this scenario, the demand equation is based on the price of noodles, income, and the marginal utility of sauce (P_x). Therefore, the marginal utility derived from the sauce affects the price that people are willing to pay for the noodles.

Scenario 5.1 The Demand for Noodles Is Given by the Following Equation