Suppose that Ms. Thomson is currently exhausting her money income by purchasing 10 units of A and 8 units of B at prices of $2 and $4 respectively. The marginal utility of the last units of A and B are 16 and 24 respectively. These data suggest that Ms

Thomson:

A. has preferences that are at odds with the principle of diminishing marginal utility.
B. considers A and B to be complementary goods.
C. should buy less A and more B.
D. should buy less B and more A.


Answer: D

Economics

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