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John Is Allocating His Household Expenditure Between Groceries and Housing

Question 104

Multiple Choice

John is allocating his household expenditure between groceries and housing in order to maximize total utility.For the quantities of groceries and housing he has chosen,an increase in the price of housing will,ceteris paribus,


A) increase the marginal utility of a unit of housing.
B) increase the marginal utility per dollar spent on housing.
C) reduce the marginal utility of a unit of housing.
D) reduce the marginal utility per dollar spent on housing.
E) have no effect on the marginal utility per dollar spent on housing.

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