Question

Jermaine spends his money on cucumbers and lettuce. If the price of cucumbers falls, the MU per dollar of cucumbers will _______ and Jermaine will _______ cucumbers for lettuce. rise; substitute fall; supply rise; demand fall; substitute

Answer 1

Option A.

• If the price of cucumbers falls, the MU per dollar of cucumbers will rise and Jermaine will substitute cucumbers for lettuce.
• When the price of any good falls, the marginal utility or additional benefit gained from consuming that good increases.
• The consumer's will be willing to spend on such goods that maximizes their utility by substituting them over other goods.
• Hence, Jermaine substituted cucumbers for lettuce as his marginal utility is utilised by consuming them more than lettuce.