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Samiuela Felemi
on Nov 26, 2024

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We know with certainty that a consumer will buy a newly introduced product rather than an existing product when the

A) MU/ P of the new product exceeds the MU/ P of the existing product.
B) price of the new product is less than the price of the existing product.
C) MU of the new product is more than the MU of the existing product.
D) law of diminishing marginal utility applies to the existing product.

MU/P Ratio

The MU/P Ratio stands for the marginal utility to price ratio, used in economics to analyze consumer choice by comparing the additional satisfaction (utility) received from an increase in consumption of a good relative to its price.

  • Gain an understanding of how the marginal utility (MU), price (P), and marginal utility-to-price ratio (MU/P) affect consumer choices among new and established products.
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Ethan SmithNov 28, 2024
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