Question

Anne has chosen how many bagels and how many units of cream cheese she would buy this month. She has $20 to spend on these two goods. Suppose that her chosen combination, the marginal benefit per dollar for bagels is $6, and her marginal benefit per dollar for cream cheese is $10. If she decides to buy more bagels and less cream cheese, ________. Group of answer choices her marginal benefit per dollar for bagels will increase, and her marginal benefit per dollar for cream cheese will remain the same her marginal benefit per dollar for bagels will decrease, and her marginal benefit per dollar for cream cheese will increase her marginal benefit per dollar for bagels will decrease, and her marginal benefit per dollar for cream cheese will remain the same her marginal benefit per dollar for bagels will increase, and her marginal benefit per dollar for cream cheese will decrease

Answer 1

Answer:

The correct answer is:  her marginal benefit per dollar for bagels will decrease, and her marginal benefit per dollar for cream  cheese will increase.

Explanation:

Anne has $20 to spend on two goods bagels and cream cheese.

The marginal benefit per dollar for bagels is $6.

The marginal benefit per dollar for cream cheese is $10.

If she decides to buy more bagels and less cream cheese, the marginal benefit per dollar for bagels will decrease and marginal benefit per dollar for cream cheese will increase.

The marginal benefit per dollar for a commodity is the ratio of marginal utility derived from consuming the last unit of the commodity upon price of the commodity.

As more and more quantity of a commodity is consumed the marginal benefit per dollar for it will go on declining. This is because the marginal utility derived from each additional unit will go on declining while price will remain the same. The less the commodity is consumed, the marginal benefit per dollar for it will increase.