If consumers are convinced by ads that Brand X has a lot more value than they originally thought, then the MU/P of X will decrease.

Question

Candace Beverly · Accepted Answer

Final Answer : False, Explanation :  If consumers are convinced by ads that Brand X has a lot more value than they originally thought, their marginal utility (MU) for Brand X increases relative to its price (P), thus increasing the MU/P ratio, not decreasing it.

If consumers are convinced by ads that Brand X has a lot more value than they originally thought, then the MU/P of X will decrease.

Definitions

Learning Objectives

Learning Objectives

Related questions