Suppose that Erin spends all of her income on two goods: pizza and fiction novels. If the price of pizza rises, then

A. The current marginal utility per dollar spent on pizza will rise
B. The current marginal utility per dollar spent on pizza will fall
C. The current marginal utility per dollar spent on fiction novels will rise
D. The current marginal utility per dollar spent on fiction novels will fall

The answer is B?

yes, but am not sure

To determine the correct answer, we need to understand the concept of marginal utility. Marginal utility refers to the additional satisfaction or happiness one derives from consuming one more unit of a good or service.

In this scenario, if the price of pizza rises, Erin may need to adjust her spending habits. Let's analyze the impact on marginal utility per dollar spent on pizza and fiction novels:

A. The current marginal utility per dollar spent on pizza will rise: This is incorrect. If the price of pizza rises, Erin would need to spend more money on pizza to maintain the same quantity as before. Consequently, the marginal utility per dollar spent on pizza would decrease as she has to spend more money for the same level of satisfaction.

B. The current marginal utility per dollar spent on pizza will fall: This is the correct answer. As the price of pizza rises, Erin's purchasing power for pizza decreases. She would need to spend more money to consume the same quantity, resulting in a lower marginal utility per dollar spent on pizza.

C. The current marginal utility per dollar spent on fiction novels will rise: There is no direct relationship between the price of pizza and the marginal utility per dollar spent on fiction novels. Therefore, this option is incorrect.

D. The current marginal utility per dollar spent on fiction novels will fall: There is no direct relationship between the price of pizza and the marginal utility per dollar spent on fiction novels. Therefore, this option is incorrect.

In conclusion, the correct answer is B. The current marginal utility per dollar spent on pizza will fall when the price of pizza rises.