-For David, the Marginal Utility from an Additional Car Is

question 37

Multiple Choice

-For David, the marginal utility from an additional car is 2,000 units and the marginal utility from an additional vacation is 1,000 units. David is allocating all of his budget. Hence, to maximise his utility, David will

• A) save his budget by not spending it until he can afford both the car and the vacation.
• B) shift his consumption from the vacation to the car.
• C) buy both the car and the vacation now.
• D) shift his consumption from the car to the vacation.
• E) possibly do something, but there is not enough information available to determine what he would do.