Deck 25: Consumer Choice

Question 1

An increase in the price of a good leads to:

A) an increase in the marginal utility per dollar of that good, and thus an increase in the quantity purchased.
B) an increase in the marginal utility per dollar of that good, and a decrease in the quantity purchased.
C) a decrease in the marginal utility per dollar of that good, and an increase in the quantity purchased.
D) a decrease in the marginal utility per dollar of that good, and thus a decrease in the quantity purchased.

Answer 1

D

Question 2

Use the following to answer questions: Figure: Coffee and Comic Books
(Figure: Coffee and Comic Books) Refer to the figure. The price of comic books is $0.50. Using the diagram, the marginal utility per dollar for the third comic book is:

A)11.
B) 5.5.
C)22.
D) 11.5.

Answer 2

C

Question 3

Use the following to answer questions: Figure: Coffee and Comic Books
(Figure: Coffee and Comic Books) Refer to the figure. A consumer has $2 to spend on comic books (priced at $1 per comic book) and coffee (priced at $1 per cup). To maximize utility, should this consumer buy two cups of coffee?

A) Yes, buying two cups of coffee maximizes the consumer's total utility.
B) Yes, because the marginal utility of the second comic book is less than the marginal utility of the second cup of coffee.
C) No, the consumer should put back one cup of coffee (losing 16 utils) and replace it with a comic book (gaining 18 utils).
D) No, the consumer should buy two comic books to maximize utility.

Answer 3

C

Question 4

Use the following to answer questions: Figure: Comic Books and Coffee 2
(Figure: Comic Books and Coffee 2) Refer to the figure. If a consumer has $2 to spend on comic books (priced at $1 per comic book) and coffee (price at $1 per cup) should the she buy two cups of coffee?

A) Yes, buying two cups of coffee maximizes her total utility.
B) Yes, because the marginal utility of the second comic book is less than the marginal utility of the second cup of coffee.
C) No, she should put back one cup of coffee (losing 16 utils) and replace it with a comic book (gaining 18 utils).
D) No, she should buy two comic books to maximize utility.

Question 5

Use the following to answer questions: Figure: Coffee and Comic Books
(Figure: Coffee and Comic Books) Refer to the figure. A consumer has $5 to spend on comic books (priced at $1 per comic book) and coffee (priced at $1 per cup). Using the figure, how many comic books and cups of coffee will this consumer purchase?

A) three comic books and two cups of coffee
B) two comic books and three cups of coffee
C) 2.5 comic books and 2.5 cups of coffee
D) one comic book and four cups of coffee

Question 6

Use the following to answer questions: Figure: Comic Books and Coffee 2
(Figure: Comic Books and Coffee 2) Refer to the figure. If the price of comic books in the figure is $0.50, the marginal utility per dollar for the third comic book is:

A) $11.00.
B) $5.50.
C) $22.00.
D) $11.50.

Question 7

Use the following to answer questions: Figure: Water vs. Soda
(Figure: Water vs. Soda) Refer to the figure. The figure represents the marginal utility Janet receives when she consumes bottled water and soda. The prices of bottled water and sodas are both $1 each. Janet has $2 to spend and consumes two bottles of water and no soda.

A) She would be better off if she consumed one bottle of water and one soda.
B) She would be better off if she consumed two sodas instead of two bottles of water.
C) She is maximizing her utility.
D) The marginal utility of soda will be higher than the marginal utility of bottled water.

Question 8

Use the following to answer questions: Figure: Water vs. Soda
Consumers maximize their utility when:

A) the total benefits are greater than total costs.
B) the marginal utility per dollar is equal across all goods consumed and all income is spent.
C) they consume the good on which they place the highest overall value.
D) they diversify their consumption across goods.

Question 9

The conventional demand curve appears strange to many students since the dependent variable (quantity) is on the vertical axis and the independent variable (price) is on the horizontal axis. We generally describe our demand as "If apples cost $1, then I'd be willing to buy four apples" instead of "If I want four apples, then I'd be willing to pay $1 per apple." Which concept reframes the dependent and independent variables so the orientation is more intuitive?

A) diminishing marginal utility
B) indifference curve
C) budget constraint
D) marginal rate of substitution

Question 10

Which best illustrates the concept of diminishing marginal utility?

A) Gladys is hungry and the first piece of pizza she eats tastes wonderful! The fifth piece of pizza she eats makes her sick.
B) Thomas likes tomatoes more than Janice, and thus gets more utility from tomatoes than Janice does.
C) High Fly is a new low-cost airline. Initially, it is very expensive for High Fly to offer flights to customers because of the high start-up costs, but after covering fixed costs, the additional cost of adding one more consumer falls significantly.
D) Sarah likes hamburgers, but the price she is willing to pay for them is low compared with another good she also likes.

Question 11

Use the following to answer question 13:
Figure: Water vs. Soda 2
(Figure: Water vs. Soda 2) Refer to the figure. These figures show the marginal utility Janet receives when she consumes bottled water and soda. Both water and soda cost $1 each. If Janet has $5 in income, what mix of bottled water and soda will maximize Janet's utility?

A) five bottles of water
B) four bottles of water and three sodas
C) three bottles of water and two sodas
D) 2.5 bottles of water and 2.5 sodas.

Question 12

Consumers maximize their utility when:

A) the total benefits are greater than total costs.
B) the marginal utility per dollar is equal across all goods consumed and all income is spent.
C) they consume the good on which they place the highest overall value.
D) they diversify their consumption across goods.

Question 13

Diminishing marginal utility means that marginal utility ______ as consumption ______.

A) decreases; decreases
B) decreases; increases
C) increases; decreases
D) increases; increases

Question 14

By assuming diminishing marginal utility, we mean that:

A) consumers get less overall value from goods as their income rises.
B) consumers value some goods more than others.
C) the cost of producing goods declines as output increases.
D) consumers value additional units of a good less and less.

Question 15

Amy purchased four cantaloupes at $2 each and three watermelons at $4 each. If Amy is following the optimal consumption rule, the marginal utility of the fourth cantaloupe and third watermelon are:

A) 12 and 24, respectively.
B) 4 and 3, respectively.
C) 40 and 10, respectively.
D) 6 and 8, respectively.

Question 16

Which statement best illustrates the concept of diminishing marginal utility?

A) Gladys is hungry and the first piece of pizza she eats tastes wonderful! The second tastes great, the third good, the fourth okay, and the fifth piece of pizza she eats makes her sick.
B) Thomas likes tomatoes more than Janice, and thus gets more utility from tomatoes than Janice does.
C) High Fly is a new low-cost airline. Initially it is very expensive for High Fly to offer flights to customers because of the high start-up costs, but after fixed costs are covered the additional cost of adding one more consumer falls significantly.
D) Sarah likes hamburgers, but the price she is willing to pay for them is low as compared to another good.

Question 17

Everyone should shop at ______ because they offer the lowest price.

A) Costco
B) Sam's Club
C) BJ's
D) None of the above answers is correct.

Question 18

By assuming diminishing marginal utility, we mean that:

A) consumers get less overall value from goods as their income rises.
B) consumers value some goods more than others.
C) the cost of producing goods declines as output increases.
D) consumers value additional units of a good less than the previous unit.

Question 19

If the price of cantaloupe increases, the marginal utility per dollar of cantaloupe:

A) decreases, so the consumer buys fewer cantaloupes, and the demand curve for cantaloupes slopes downward.
B) increases, so the consumer buys more cantaloupes, and the demand curve for cantaloupes slopes downward.
C) increases, so the consumer buys fewer cantaloupes, and the demand curve for cantaloupes slopes downward.
D) decreases, so the consumer buys fewer cantaloupes, and the demand curve for cantaloupes slopes upward.

Question 20

Use the following to answer questions: Figure: Water vs. Soda
(Figure: Water vs. Soda) Refer to the figure. The figure represents the marginal utility Janet receives when she consumes bottled water and soda. The prices of bottled water and sodas are both $1 each. Janet has $5 to spend. What mix of bottled water and soda will maximize Janet's utility?

A) five bottles of water
B) four bottles of water and one soda
C) three bottles of water and two sodas
D) 2.5 bottles of water and 2.5 sodas

Question 21

Increasing marginal utility means that marginal utility ______ as consumption ______.

A) decreases; decreases
B) decreases; increases
C) increases; decreases
D) increases; increases

Question 22

Use the following to answer questions: Figure: Music and Movie Downloads
(Figure: Music and Movie Downloads) Refer to the figure. This figure shows Stan's $45 budget constraint for movie and music downloads each month. What is the price per movie and music download?

A) $15 per movie download and $0.45 per music download
B) $3 per movie download and $1 per music download
C) $2.50 per movie download and $1.50 per music download
D) $10 per movie download and $0.80 per music download

Question 23

Figure: Budget Constraints 3 Refer to the figure. What could have caused the shift in the budget constraint?

A) The price of music downloads decreased.
B) The price of movie downloads increased.
C) This consumer's income increased.
D) This consumer's income decreased.

Question 24

Assume that the unit price of good A is $2, and the unit price of good B is $2. If an individual has income of $20, which consumption bundles of (good A, good

A) (5,5)
B) (5,4)
B) is on the edge of the budget constraint?
C) (6,3)
D) (6,5)

Question 25

Use the following to answer questions: Figure: Budget Constraint 4
(Figure: Budget Constraint 4) Refer to the figure. This figure represents the budget constraint of a consumer who purchases flip-flops and sneakers. The slope of the budget constraint is equal to:

A) the price of sneakers divided by the price of flip-flops.
B) the price of flip-flops divided by the price of sneakers.
C) the consumer's income.
D) the quantity of flip-flops divided by the quantity of sneakers.

Question 26

Figure: Music and Movie Downloads 2 Refer to figure. What could have caused the shift of the budget constraint in this figure?

A) The price of music downloads decreased.
B) The price of movie downloads increased.
C) The consumer's income increased.
D) The consumer's income decreased.

Question 27

Use the following to answer questions: Figure: Budget Constraint 2
(Figure: Budget Constraint 2) Refer to the figure. What is the relative price of music downloads to movie downloads?

A) 3
B) 1/3
C) 5
D) 4

Question 28

Use the following to answer questions: Figure: Budget Constraint
(Figure: Budget Constraint) Refer to the figure. The slope of the budget constraint in the figure above is equal to:

A) the price of sneakers divided by the price of flip-flops.
B) the price of flip-flops divided by the price of gas.
C) the quantity of flip-flops divided by the quantity of sneakers.
D) the quantity of sneakers divided by the quantity of flip-flops.

Question 29

Use the following to answer questions: Figure: Budget Constraint
(Figure: Budget Constraint) Refer to the figure. If the price of sneakers rises, then the budget constraint in the figure will:

A) not change.
B) become steeper.
C) become flatter.
D) shift to the left.

Question 30

Use the following to answer questions: Figure: Budget Constraint 2
(Figure: Budget Constraint 2) Refer to the figure. A consumer has $45 to spend on movie and music downloads per month. What is the price per movie and music download?

A) $15 per movie download and $0.45 per music download
B) $3 per movie download and $1 per music download
C) $2.50 per movie download and $1.50 per music download
D) $10 per movie download and $0.80 per music download

Question 31

Diminishing marginal utility means that one's first apple in a sitting is ______ one's second apple in the same sitting.

A) worse than
B) better than
C) incomparable with
D) equally good as

Question 32

Assume that the unit price of good A is $3, and the unit price of good B is $5. If an individual has income of $43, which consumption bundles of (good A, good

A) (5,5)
B) (5,4)
B) is on the edge of the budget constraint?
C) (6,4)
D) (6,5)

Question 33

An increase in the price of a good leads to a(n) ______ in the marginal utility per dollar of that good, and thus a(n) ______ in the quantity purchased.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Question 34

Increasing marginal utility means that one's first apple in a sitting is ______ one's second apple in the same sitting.

A) worse than
B) better than
C) incomparable with
D) equally good as

Question 35

Assume that the unit price of good A is $4, and the unit price of good B is $5. If an individual has income of $44, which consumption bundles of (good A, good

A) (5,5)
B) (5,4)
B) is on the edge of the budget constraint?
C) (6,4)
D) (6,5)

Question 36

Constant marginal utility means that marginal utility ______ as consumption ______.

A) remains constant; increases
B) remains constant; decreases
C) increases; increases
D) increases; decreases

Question 37

Constant marginal utility means that one's first apple in a sitting is ______ one's second apple in the same sitting.

A) worse than
B) better than
C) incomparable with
D) equally good as

Question 38

Assume that the unit price of good A is $2, and the unit price of good B is $5. If an individual has income of $30, which consumption bundles of (good A, good

A) (5,5)
B) (5,4)
B) is on the edge of the budget constraint?
C) (6,4)
D) (6,5)

Question 39

Use the following to answer questions: Figure: Budget Constraint 4
(Figure: Budget Constraint 4) Refer to the figure. This figure represents the budget constraint of a consumer who purchases flip-flops and sneakers. If the price of sneakers rises, then the budget constraint will:

A) not change.
B) become steeper.
C) become flatter.
D) shift to the left.

Question 40

Use the following to answer questions: Figure: Music and Movie Downloads
(Figure: Music and Movie Downloads) Refer to the figure. What is the relative price of music downloads to movie downloads?

A) 3
B) 1/3
C) 5
D) 4

Question 41

Figure: Marginal Rate of Substitution Refer to the figure. What is the marginal rate of substitution (MRS) between Bundle A and Bundle B?

A) 4.5; the consumer is willing to trade 4.5 movie downloads for one music download.
B) three; the consumer is willing to give up three movie downloads for an additional music download.
C) 1.5; the consumer will buy 1.5 times as many music downloads as movie downloads.
D) one; the consumer faces a one-to-one trade-off.

Question 42

Use the following to answer questions: Figure: Indifference Curve 2
(Figure: Indifference Curve 2) Refer to the figure. Which statement is true?

A) This consumer prefers Bundle C to Bundle A.
B) This consumer is indifferent between Bundle B and Bundle A.
C) Only Bundles A, C, and D are relevant.
D) Bundle B generates the highest utility out of all the points shown.

Question 43

As one moves down along an indifference curve, the slope of the indifference curve typically:

A) increases.
B) decreases.
C) remains constant.
D) changes in an indeterminate direction.

Question 44

Figure: Music and Movie Downloads 3 Refer to the figure. What is the marginal rate of substitution (MRS) between bundle A and bundle B in this figure?

A) The MRS is 4.5; the consumer is willing to trade 4.5 movie downloads for 1 music download.
B) The MRS is 3; the consumer is willing to give up 3 movie downloads for an additional music download.
C) The MRS is 1.5; the consumer will buy 1.5 times as many music downloads as movie downloads.
D) The MRS is 1; the consumer faces a one-to-one tradeoff.

Question 45

Use the following to answer questions: Figure: Indifference Curve
(Figure: Indifference Curve) Refer to the figure. This figure represents the indifference curve of a consumer who purchases flip-flops and sneakers. Which statement is TRUE?

A) The consumer would prefer bundle C to bundle A.
B) A consumer is indifferent between bundle B and bundle A.
C) Bundle E is not utility maximizing.
D) Bundle B generates the highest utility out of all the points shown.

Question 46

Figure: Preferences and Indifference Curves Refer to the figure. According to the indifference curves for Kiwis and Nuts, which statement is TRUE?

A) Indifference curve U₁ provides higher utility than indifference curve U₂.
B) Bundle A is preferred to Bundle B.
C) Bundle C is preferred to Bundle D.
D) Bundle C is preferred to Bundle B.

Question 47

If the budget constraint shifts northeast or away from the origin, the consumer can afford:

A) fewer bundles.
B) the same set of bundles.
C) more bundles.
D) sometimes fewer bundles, sometimes more bundles, and sometimes the same number of bundles.

Question 48

Use the following to answer questions: Figure: Indifference Curve
(Figure: Indifference Curve) Refer to the figure. This figure represents the indifference curve of a consumer who purchases flip-flops and sneakers. Which point generates the highest level of utility for the consumer?

A) A
B) B
C) C
D) D

Question 49

Figure: Kiwi and Nuts Refer to figure. Which statement is TRUE for this figure?

A) Indifference curve U₁ provides higher utility than indifference curve U₂.
B) Bundle A is preferred to bundle B.
C) Bundle C is preferred to bundle D.
D) Bundle D is preferred to bundle A.

Question 50

Use the following to answer questions: Figure: Optimal Choice
(Figure: Optimal Choice) Refer to the figure. Suppose the figure represents indifference curves of a consumer who purchases flip-flops and sneakers. If the dotted line represents this consumer's budget constraint, then Bundle D on the graph:

A) results in a lower level of overall utility than Bundle E.
B) is preferred to point E but unattainable.
C) has a higher marginal rate of substitution than Bundle E.
D) maximizes total utility.

Question 51

Preferences are characterized generally by:

A) budget constraints.
B) consumption bundles.
C) indifference curves.
D) income.

Question 52

Use the following to answer questions: Figure: Optimal Choice 2
(Figure: Optimal Choice 2) Refer to the figure. This figure represents indifference curves for a consumer who purchases flip-flops and sneakers. If the dotted line represents this consumer's budget constraint, then the utility maximizing bundle for this consumer is:

A) A.
B) B.
C) C.
D) E.

Question 53

As one moves down along an indifference curve, the curve typically:

A) falls at a faster rate.
B) falls at a constant rate.
C) falls at a slower rate.
D) begins to rise.

Question 54

The consumption bundle that maximizes utility for a consumer is the bundle that:

A) equates the slope of the budget constraint with the slope of the indifference curve.
B) maximizes marginal utility across all goods.
C) minimizes the costs of production.
D) maximizes the marginal rate of substitution.

Question 55

Use the following to answer questions: Figure: Indifference Curve 2
(Figure: Indifference Curve 2) Refer to the figure. Which point generates the highest level of utility for the consumer?

A) A
B) B
C) C
D) D

Question 56

As indifference curves move northeast or away from the origin, bundles of goods along indifference curves yield:

A) lower utility.
B) the same utility.
C) higher utility.
D) utility that is sometimes higher, sometimes the same, and sometimes lower.

Question 57

Use the following to answer questions: Figure: Optimal Choice
(Figure: Optimal Choice) Refer to the figure. If the dotted line in the figure represents this consumer's budget constraint, then the utility-maximizing bundle for this consumer is:

A) A.
B) B.
C) C.
D) E.

Question 58

What does a single indifference curve represent?

A) a bundle of goods
B) a budget
C) a level of utility
D) decreasing marginal utility

Question 59

Figure: Consumption Bundle Refer to the figure. Which statement is FALSE?

A) The optimal consumption bundle contains five movie downloads and 10 music downloads.
B) The MRS is 0.50 at the optimal consumption bundle.
C) The price per music download is half as expensive as the price per movie download.
D) In the optimum consumption bundle, the marginal utility of movie downloads equals half the marginal utility of music downloads.

Question 60

At the consumer's optimal consumption bundle, the MRS_XY is 4, and the marginal utility of good X is 8. What is the marginal utility of good Y?

A) 1/2
B) 2
C) 24
D) 16

Question 61

Use the following to answer questions: Figure: Water and Electricity
(Figure: Water and Electricity) Refer to the figure. Using the solid budget constraint in this diagram, how much electricity and water per hour does this individual consume?

A) 2 MJ and 9 gallons
B) 4 MJ and 6 gallons
C) 6 MJ and 3 gallons
D) 7 MJ and 5 gallons

Question 62

Use the following to answer questions: Figure: Music and Movie Downloads 5
(Figure: Music and Movie Downloads 5) Refer to the figure. The consumer in this diagram is initially optimizing consumption at point A than moves to point B. The substitution effect of the price change causes the consumer to:

A) reduce the number of music downloads by 3.
B) reduce the number of music downloads by 4.
C) increase the number of music downloads by 1.
D) increase the number of music downloads by 3.

Question 63

The ______ is the change in consumption caused by a change in purchasing power from a price change.

A) budget constraint
B) indifference curve
C) income effect
D) substitution effect

Question 64

If there are only two goods in the economy, chocolate and peanut butter, and the price of chocolate falls, the new utility-maximizing bundle for a typical consumer would entail consuming _____ peanut butter and ______ chocolate.

A) less; more
B) more; less
C) more; more
D) less; less

Question 65

Figure: Music and Movie Downloads 4 Refer to the figure. According to this figure, which of the following statements is FALSE?

A) The optimal consumption bundle contains 5 movie downloads and 10 music downloads.
B) The MRS is 0.50 at the optimal consumption bundle.
C) The price per music download is half as expensive as the price per movie download.
D) At the optimal consumption bundle, the marginal utility of movie downloads is equal to half the marginal utility of music downloads.

Question 66

At the consumer's utility maximizing bundle that uses all of her budget, the slope of the budget constraint is ______ the slope of the indifference curve.

A) greater than
B) equal to
C) less than
D) indeterminately different from

Question 67

At the consumer's optimal consumption bundle, the MRS_XY is 4, and the marginal utility of good X is 8. What is the marginal utility of good Y?

A) 1/2
B) 2
C) 24
D) 16

Question 68

The consumption bundle that maximizes utility for a consumer is the bundle that:

A) equates the slope of the budget constraint with the slope of the indifference curve.
B) maximizes marginal utility across all goods.
C) minimizes the costs of production.
D) maximizes the marginal rate of substitution.

Question 69

Use the following to answer questions: Figure: Income and Substitution Effects
(Figure: Income and Substitution Effects) Refer to the figure. What caused this consumer to switch optimal consumption bundles from Bundle A to Bundle B?

A) a decrease in consumer income available for music downloads
B) a decrease in the price of music downloads
C) an increase in the price of music downloads
D) an increase in the price of movie downloads

Question 70

Use the following to answer questions: Figure: Music and Movie Downloads 5
(Figure: Music and Movie Downloads 5) Refer to the figure. What caused the consumer's optimal consumption bundle in this figure to switch from bundle A to bundle B?

A) a decrease in consumer income
B) a decrease in the price of music downloads
C) an increase in the price of music downloads
D) an increase in the price of movie downloads

Question 71

Consider an indifference curve based around video games and pizza. If the price of pizza falls, what would have to be true for the consumer to buy less pizza compared with when the price of pizza was higher?

A) Pizza and video games would be perfect substitutes.
B) The income effect would be greater than the substitution effect.
C) Consumption would lie on the same indifference curve.
D) The consumer would be buying as a suboptimal consumption bundle.

Question 72

Use the following to answer questions: Figure: Water and Electricity
(Figure: Water and Electricity) Refer to the figure. Using the solid budget constraint in this diagram, if electricity costs $6 per MJ, how much does a gallon of water cost?

A) $4
B) $6
C) $8
D) $12

Question 73

In consumer choice, one maximizes ______ subject to a budget constraint.

A) quantity
B) price savings
C) utility
D) utility, price savings, and quantity

Question 74

Use the following to answer questions: Figure: Optimal Choice 2
(Figure: Optimal Choice 2) Refer to the figure. This figure represents indifference curves of a consumer who purchases flip-flops and sneakers. If the dotted line represents this consumer's budget constraint, then bundle D on the graph:

A) results in a lower level of overall utility than bundle E.
B) is preferred to point E but is unattainable.
C) has a higher marginal rate of substitution than bundle E.
D) maximizes total utility.

Question 75

The ______ is the change in consumption caused by a change in relative prices holding the consumer's utility level constant.

A) budget constraint
B) indifference curve
C) income effect
D) substitution effect

Question 76

If there are only two goods in the economy, chocolate and peanut butter, and the price of chocolate falls, the new utility-maximizing bundle for a typical consumer would entail consuming ______ peanut butter and ______ chocolate.

A) less; more
B) more; less
C) more; more
D) less; less

Question 77

When you lose a concert ticket, this occurrence causes ______ effect.

A) an income effect
B) a substitution effect
C) both income and substitution effects
D) neither income nor substitution effects

Question 78

When the price of a good changes, ______ influence(s) the change in consumption.

A) the income effect alone
B) the substitution effect alone
C) both the income effect and the substitution effect
D) neither the income effect nor the substitution effect

Question 79

Use the following to answer questions: Figure: Music and Movie Downloads 5
(Figure: Music and Movie Downloads 5) Refer to the figure. The consumer in this diagram is initially optimizing consumption at point A than moves to point B. The income effect of the price change causes the consumer to:

A) increase the number of music downloads by 3.
B) increase the number of music downloads by 4.
C) reduce the number of music downloads by 1.
D) reduce the number of music downloads by 3.

Question 80

Use the following to answer question 70:
Figure: Water and Electricity 2
(Figure: Water and Electricity 2) Refer to the figure. If the price of electricity changed and the price of water stayed the same, causing the change in the budget constraint as indicated by the dashed line, did an income effect play a role in the change in this person's consumption bundle?

A) No, because the new consumption point is on the same indifference curve.
B) No, because the new consumption point has less water, not more.
C) Yes, because there was a change in relative prices.
D) Yes, because after keeping utility constant this person still buys more electricity.