Jill Smith, a Careful Maximizer of Utility, Consumes Only Two

question 42

Multiple Choice

Jill Smith, a careful maximizer of utility, consumes only two goods, peanut butter and ice cream.She had just achieved the utility-maximizing solution in her consumption of the two goods when the price of peanut butter rose.As she adjusts to this event:

• A) the marginal utility of peanut butter and of ice cream will rise.
• B) the marginal utility of peanut butter and of ice cream will fall.
• C) the marginal utility of peanut butter will fall, and the marginal utility of ice cream will rise.
• D) the marginal utility of peanut butter will rise, and the marginal utility of ice cream will fall.

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Definitions:

MicroFridge

A compact combination of a refrigerator and microwave oven, typically used in small living spaces such as dormitory rooms.

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A small portion of food typically consumed after the usual dinner time, often late in the evening or at night.

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Frequency marketing is a strategy that rewards customers based on the frequency of their purchases, aiming to increase customer loyalty by offering incentives for repeated business.

Usage Rate

The frequency with which a consumer uses a product or service over a specified period.