Steven consumes staples and paper clips.He is maximizing his utility in consumption of both goods.The price of paper clips rises.Assuming that diminishing marginal utility applies to both goods,as Steven adjusts to this event,the marginal utility of staples will _,and the marginal utility of paper clips will _.

A) rise;fall
B) fall;rise
C) rise;rise
D) fall;fall

Question

Steven consumes staples and paper clips.He is maximizing his utility in consumption of both goods.The price of paper clips rises.Assuming that diminishing marginal utility applies to both goods,as Steven adjusts to this event,the marginal utility of staples will _____,and the marginal utility of paper clips will _____.

A) rise;fall
B) fall;rise
C) rise;rise
D) fall;fall

Adrian Quejada · Accepted Answer

Final Answer : B, Explanation :  Assuming diminishing marginal utility, as the price of paper clips rises, Steven will consume less paper clips and more staples. This means the marginal utility of paper clips will fall (as he consumes less of it) and the marginal utility of staples will rise (as he consumes more of it).

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