Billy buys candy and popcorn. When candy is $0.50 a bag and popcorn is $1 per bag, Billy is at consumer equilibrium. If the price of candy rises to $1 a bag, how does marginal utility theory predict that Billy's buying plans will change?

Question

Accepted Answer

Billy's marginal utility per dollar of candy increases as the quantity demanded of candy decreases up along the demand curve.

Answer

Billy's marginal utility per dollar of candy decreases, so his quantity of candy demanded increases along his demand curve for candy.

Answer

Billy's total utility will not change, but the quantity demanded of candy will decrease along his demand curve.

Answer

Billy's marginal utility from popcorn increases, so he moves down along his demand curve for popcorn.

Answer

Billy's marginal utility from candy will decrease, so his quantity of candy demanded increases along his demand curve for candy.

Crowdly

Billy buys candy and popcorn. When candy is $0.50 a bag and popcorn is $1 per ba...

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