Table 10-5 -Refer to Table 10-5, Which Lists the Values of Harry

question 17

Multiple Choice

Table 10-5

-Refer to Table 10-5, which lists the values of Harry Taber's marginal utility and marginal utility per dollar for Italian submarine (sub) sandwiches and tacos. Assume that the price of the sub sandwiches is $4 and the price of tacos is $2. When Harry's income is $14 he buys two Italian sub sandwiches and three tacos. The last column lists the values of the marginal utility per dollar for tacos when the price of tacos decreases to $1. Complete this statement: As a result of the change in price, the marginal utility of each taco Harry consumes increases and

• A) the substitution effect of the price change will cause Harry to buy more tacos and fewer subs.
• B) the substitution effect of the price change will cause Harry to buy more tacos if they are a normal good, and fewer tacos if they are an inferior good.
• C) the substitution effect will cause Harry to buy another sub because his purchasing power has increased.
• D) the substitution effect will cause Harry to buy fewer tacos.

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