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AP®︎/College Microeconomics

Lesson 6: Marginal analysis and consumer choice

Utility Maximization

Nate is currently spending his entire budget on two goods: food and entertainment. He was willing to pay

$ 2

for the last unit of food he purchased and

$ 2,000

for the last unit of entertainment he purchased.

Which of the following is the best explanation of why he is willing to pay so much more for entertainment?

(Choice A)
Nate is irrational and doesn't understand that food is a necessity and entertainment is not.
(Choice B)
Nate's total utility from entertainment is higher than his total utility from food
(Choice C)
Nate's total utility from food is higher than his total utility from entertainment.
(Choice D)
Nate's marginal utility from food is higher than his marginal utility of entertainment
(Choice E)
Nate's marginal utility from entertainment is higher than his marginal utility of food

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