James enjoys having either a peanut butter sandwich or a bologna sandwich for his lunch. A drop in the price of peanut butter increases the marginal utility per dollar of peanut butter and causes James to buy more peanut butter and less bologna to restore maximum utility. This best illustrates the: a. substitution effect b. law of increasing total utility c. law of diminishing marginal utility d. income effect

James enjoys having either a peanut butter sandwich or a bologna sandwich for his lunch. A drop in the price of peanut butter increases the marginal utility per dollar of peanut butter and causes James to buy more peanut butter and less bologna to restore maximum utility. This best illustrates the: a. substitution effect b. law of increasing total utility c. law of diminishing marginal utility d. income effect

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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