Microeconomics help please (urgent)

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You go to an auction and set a maximum price of $100 you are willing to bid on an item. However, you are fortunate and purchase it for $50.

1) Does the lower price alter the marginal utility you originally placed on the item?
2) Is your potential total utility increased because of the lower price?

  • Microeconomics help please (urgent) -

    1) Under the most common utility functions, No. Price paid is independent of the marginal utility received.
    2) Yes, Instead of getting the item for $100, you get the item plus have $50 to spend on something else.

    (Note: in future posts, I suggest you let us know what you think the answer is. We would much rather critique your thinking than to just give you the answer right out.)

  • Microeconomics help please (urgent) -

    Thank you. I will remember the advice in the future:)

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