When Bo increases the consumption of Good X and decrease the consumption of Good Y, her marginal utility of
A) X falls and the marginal utility of Y will increase.
B) both X and Y will decrease.
C) X increases and the marginal utility of Y will fall.
D) both X and Y will increase.

Question

Quizplus · Accepted Answer

According to the law of diminishing marginal utility, as Bo increases her consumption of Good X, the additional satisfaction (marginal utility) she gets from consuming an additional unit of Good X will decrease. Conversely, by consuming less of Good Y, the marginal utility of Good Y will increase because she is now experiencing less of the diminishing effect on satisfaction from consuming additional units of Good Y.

When Bo Increases the Consumption of Good X and Decrease