Michael Kawamura, a Careful Maximizer of Utility, Consumes Only Two

question 69

Multiple Choice

Michael Kawamura, a careful maximizer of utility, consumes only two goods, peanut butter and ice cream.He had just achieved the utility-maximizing solution in his consumption of the two goods when the price of peanut butter fell.As he 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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