When a consumer shifts her purchases from product X to product Y, the 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

When a consumer shifts her purchases from product X to product Y, it implies that the last unit of X consumed was providing less satisfaction compared to what the consumer expects to gain from Y. Therefore, the marginal utility of X increases because the consumer is consuming less of X, making each unit of X more valuable. Conversely, the marginal utility of Y falls as the consumer consumes more of Y, making each additional unit less valuable due to the law of diminishing marginal utility.

When a Consumer Shifts Her Purchases from Product X to Product