A-LevelEconomicsThe price system and the microeconomy9708/31 · May/June 2020 · Q41 Mark

An individual consumes goods X and Y. The marginal utility of good X is positive and falling. The consumer is at the point where the ratio of the marginal utility of the two goods is equal to the ratio of their prices.

(a)What can be concluded from this information? A the consumer will continue to consume additional units of X until marginal utility is zero B the consumer will purchase more of X if the price of Y rises C total utility will be negative on the additional unit of X consumed D total utility will be rising at an increasing rate on the additional unit of X consumed[1]

Mark scheme

Marking points from the official mark scheme (May/June 2020). The mark or mark type is shown in brackets.

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Topic: The price system and the microeconomy, A-Level Economics (syllabus 9708). Structured question, 1 mark.
Source: A-Level Economics, May/June 2020 Paper 3 Variant 1, question 4.

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