A consumer has been buying 3 magazines and 1 book each month. The price of magazines then decreases, which directly causes the marginal utility per dollar spent on
A) magazines to increase, thereby inducing the consumer to purchase fewer magazines and more books.
B) magazines to increase, thereby inducing the consumer to purchase more magazines and fewer books.
C) books to increase, thereby inducing the consumer to purchase fewer magazines and more books.
D) books to decrease, thereby inducing the consumer to purchase fewer magazines and more books.

Question

Quizplus · Accepted Answer

The decrease in the price of magazines will increase the marginal utility per dollar spent on magazines, making them a better value for the consumer. This will induce the consumer to purchase more magazines and fewer books to maintain their budget of 3 magazines and 1 book per month. Therefore, the answer is B.

A Consumer Has Been Buying 3 Magazines and 1 Book