Question

the campus pizzeria sells a large pizza for $14. when you buy a second large pizza, however, its price is only $10. how does this relate to marginal utility?
a. since marginal utility falls as additional units of the good are consumed, consumers are only willing to purchase more as the price falls.
b. the cost of a large pizza becomes cheaper as more are consumed.
c. increases in total utility from the consumption of large pizzas become larger as more is consumed so consumers will pay more.
d. as more is consumed, the marginal utility increases so consumers are willing to purchase more at higher prices.

Explanation:

To solve this, we analyze each option using the concept of marginal utility (the additional satisfaction from consuming one more unit).

• Option A: Marginal utility typically diminishes with each additional unit consumed. So, consumers will only buy more if the price falls (to match the lower marginal utility). This matches the pizza scenario (second pizza cheaper as marginal utility of second pizza is lower, so price must be lower for purchase).
• Option B: This describes the price change but doesn't relate it to marginal utility (the question asks for the relation to marginal utility), so it's incorrect.
• Option C: Total utility increases but at a decreasing rate (due to diminishing marginal utility), so the increase in total utility gets smaller, not larger, as more is consumed. Thus, this is wrong.
• Option D: Marginal utility decreases (not increases) with additional consumption, so consumers won't pay more for more units. This is incorrect.

Answer:

A. Since marginal utility falls as additional units of the good are consumed, consumers are only willing to purchase more as the price falls.