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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
VerifiedSolution A
Solution B
Answered 8 months ago
Step 1
1 of 2The following table has been constructed based on the information given:
- The marginal utility for a cup of coffee is utils per cup no matter many how many cups Omar drinks.
- The marginal utility for a doughnut decreases by util as an additional doughnut is consumed.
- The coffee costs per cup and doughnuts cost each.
The marginal utility per dollar for both doughnuts and coffee is calculated by dividing MU by the respective price of the commodity.
Answered 11 months ago
Step 1
1 of 3In this problem, we are asked to determine the budget that Omar needs to have in order to consume coffee and doughnut as well.
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