Lucy Buys Only Magazines and CDs

question 262

Multiple Choice

Lucy buys only magazines and CDs. Both are normal goods. Lucy's income decreases, but the prices of magazines and CDs do not change. Marginal utility theory predicts that Lucy will

• A) buy fewer magazines and fewer CDs.
• B) substitute magazines for CDs.
• C) increase her marginal utility from both magazines and CDs by buying more magazines and CDs.
• D) buy more magazines and more CDs.

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Definitions:

Critical Differences

Significant or substantial variances between entities or conditions that are of importance to understanding or decision-making.

Prototypes

Original or first models of something from which other forms are copied or developed, often used in the context of designs, technology, or cognition.

Divergent Thinking

The cognitive process of thinking about multiple solutions to a problem, often associated with creativity.

Mirror-Recognition

The ability of an individual to recognize themselves in a mirror, indicating self-awareness.