Nathalie Is Maximising Total Utility While Consuming Food and Clothing

question 7

Multiple Choice

Nathalie is maximising total utility while consuming food and clothing. Her marginal utility from food and clothing is 50 and 25, respectively. If clothing is priced at R100 per unit, the price of food must

• A) be rising.
• B) be falling.
• C) equal R100 as well.
• D) equal R200.

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Definitions:

Excess Demand

A market condition where the quantity demanded of a product exceeds the quantity supplied at a given price.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service.

Price Ceiling

A government-imposed limit on how high a price can be charged on a product or service, intended to protect consumers.

Market Price

The current price at which an asset or service can be bought or sold in a particular market.