Steven Consumes Staples and Paper Clips

question 121

Multiple Choice

Steven consumes staples and paper clips.He is maximizing his utility in consumption of both goods.The price of staples falls.Assuming that diminishing marginal utility applies to both goods,as Steven adjusts to this event,the marginal utility of staples will _____,and the marginal utility of paper clips will _____.

• A)rise;fall
• B)rise;rise
• C)fall;fall
• D)fall;rise

---

Definitions:

Accrued Interest

Interest that has been earned but not yet paid, often related to bonds or loans.

Upstream Sale

A transaction where a subsidiary sells goods or services to its parent company, affecting intercompany transactions and transfer pricing.

Unrealised Profits

Profits that have been earned but not yet realized through a transaction, such as the increase in value of an investment that has not been sold.