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If the marginal value of a third soda is $1
If the marginal value of a third soda is $1.50 to Jackie, then _____.
a. Jackie would be willing to pay no more than $4.50 for three sodas
b. Jackie places a total value of less than $4.50 on three sodas
c. Jackie would pay no more than $1.50 for an additional soda when she has already consumed 2 sodas
d. Jackie would pay no more than $1.50 for any soda
Expert Solution
If the marginal value of a third soda is $1.50 to Jackie, then c. Jackie would pay no more than $1.50 for an additional soda when she has already consumed 2 sodas.
A marginal value is the maximum price that a consumer is willing to pay for an additional unit of a good. It does not tell us the value of the previous unit purchased or the total value of all outputs purchased. The marginal value of $1.50 means that Jackie is willing to pay $1.50 for an additional soda. She will not buy another soda if it is more than $1.50, say $1.60. However, she may buy another soda if it is $1.50 or less, say $1.40.
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