Alfred derives utility from consuming iced tea and lemonade. For the bundle he currently​ consumes, the marginal utility he receives from iced tea is 16​ utils, and the marginal utility he receives from lemonade is 8 utils. Instead of consuming this​ bundle, Alfred should:. a. buy more iced tea and less lemonade. b. buy more lemonade and less iced tea. c. buy more iced tea and lemonade. d. buy less iced tea and lemonade. e. none of these.

A

Explanation:

Marginal utility is the additional utility derived from consuming one more unit of a good

the consumption decision is to consume more units of a good that gives the higher utility per good.  

Marginal utility per good = marginal utility / price of the good  

When marginal utility is positive, it means that increasing consumption by one unit increases total utility

When marginal utility is negative, it means that increasing consumption by one unit decreases total utility

When marginal utility is zero, total utility has reached its maximum and no more units of goods would be consumed

An example of marginal utility. Imagine a traveller arriving from the desert where he hadn't had a drink of water in days .he is offered his first glass of water. the first cup of water he drinks would give him the highest utility. As more and more cups of water is drank, marginal utility decreases. At the point where he is fully satisfied, he stops drinking water and marginal utility becomes zero.

income increases, enabling consumers to buy more goods and services. ( c.)

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