Refer to Table 10-5, which lists the values of Harry Taber's marginal utility and marginal utility per dollar for Italian submarine (sub) sandwiches and tacos. Assume that the price of the sub sandwiches is $4 and the price of tacos is $2. When Harry's income is $14 he buys two Italian sub sandwiches and three tacos. The last column lists the values of the marginal utility per dollar for tacos when the price of tacos decreases to $1. Complete this statement: As a result of the change in price, the marginal utility of each taco Harry consumes increases and
A. the substitution effect of the price change will cause Harry to buy more tacos if they are a normal good, and fewer tacos if they are an inferior good.
B. the substitution effect will cause Harry to buy another sub because his purchasing power has increased.
C. the substitution effect of the price change will cause Harry to buy more tacos and fewer subs.
D. the substitution effect will cause Harry to buy fewer tacos.
Answers: 1
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Refer to Table 10-5, which lists the values of Harry Taber's marginal utility and marginal utility p...
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