Tom Is Maximizing Utility by Buying Three Packs of Bubble

question 8

Multiple Choice

Tom is maximizing utility by buying three packs of bubble gum and four packages of Skittles. Given diminishing marginal utility, if the price of Skittles rises, the principle of rational choice tells us that Tom will buy:

• A) more Skittles, raising the opportunity cost of not consuming Skittles.
• B) fewer Skittles, raising the opportunity cost of not consuming Skittles.
• C) more Skittles, lowering the opportunity cost of not consuming Skittles.
• D) fewer Skittles, lowering the opportunity cost of not consuming Skittles.

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Definitions:

JPEG Files

A format for compressing image files, widely used for storing and transmitting photographs on the web.

Intellectual Property

Legal rights that result from intellectual activity in the industrial, scientific, literary, and artistic fields.

Physical Music CD

A compact disc used to store music recordings that can be played on digital audio players, computers, or stereo systems.

Digital Currency

Electronic money stored digitally, not physically, used to conduct transactions online and, increasingly, offline.