Question

Demand curves slope downward because, other things held equal,

a. An increase in a product’s price lowers MU.

b. A decrease in a product’s price lowers MU.

c. A decrease in a product’s price raises MU per dollar and makes consumers wish to purchase more units.

d. An increase in a product’s price raises MU per dollar and makes consumers wish to purchase more units.

Solutions

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Answered 8 months ago
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The following table has been constructed based on the information given:

  1. The marginal utility for a cup of coffee is 1.51.5 utils per cup no matter many how many cups Omar drinks.
  2. The marginal utility for a doughnut decreases by 11 util as an additional doughnut is consumed.
  3. The coffee costs $1\$1 per cup and doughnuts cost $1\$1 each.

The marginal utility per dollar for both doughnuts and coffee is calculated by dividing MU by the respective price of the commodity.    'slader'

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