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8 years ago
If Callum is consuming his utility maximizing bundle and the price of one good rises, what happens to the marginal utility per dollar spent on this good (MU/P), and what should Callum do?
A) MU/P has increased and Callum should buy more of this good.
B) MU/P has increased and Callum should buy less of this good.
C) MU/P has decreased and Callum should buy more of this good.
D) MU/P has decreased and Callum should buy less of this good.
Textbook 
Essentials of Economics

Essentials of Economics


Edition: 4th
Authors:
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Chimelo46Chimelo46
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8 years ago
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Excerpt
When the price of one good rises, the marginal utility per dollar spent (MU/P) on that good decreases. To maximize utility, Callum should allocate his spending towards goods with a higher MU/P, which means buying less of the now relatively more expensive good and potentially buying more of other goods that provide a higher marginal utility per dollar spent.
1

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#2
8 years ago
Happy to assist!
Anonymous
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#3
2 months ago
Help! The answer is missing an explanation...
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#4
2 months ago
done
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