East German consumers indicated a preference for Upon mergi

, East German consumers indicated a preference for Upon merging with the West C hey flocked to Volkswagen dealerships. How can you explain his apparent paradox? Berz costs more than a Volkswagen, that East German consumers gain satiofaction from automobiles and all other goods (evaluated in deutsche marks), and that East Germans have income For East Germans, the total satisfaction from consuming a Vokswagen was greater Phan the total satislaction from consuming a Mercedes-Benz OB· the utilty tom o Mercede.Denz aloce oceeded the uury torn a vokswagen with a bnde of one, goods. O C. consumption bundles containing a Volkswagen are unattainable OD the margina utiity dollar spent on a vokswagen was greater ran te mrgnal utiity per dolar spent on a wre.de.Arz E. he margnal utlity from consuming Mercedes-Benz was greater than the margn\" utmy from consuming a Volkswagen

Solution

A consumer while deciding to buy one of the two goods or more of one of the two goods compares the satisfaction to be derived from the two goods.

This satisfaction can be measured in terms of marginal utility per dollar spent.

A consumer always buys that good which provides him or her with greater marginal utility per dollar spent because this indicates greater satisfaction.

So, even though, East German consumers preferred Merecedes-Benz over Volkswagen, however, when they converted their money in deutsche marks and undertook real purchase, they realised that marginal utility per dollar spent on the Volkswagen is greater than the marginal utility per dollar spent on Mercedes-Benz.

Due to this, they have purchased Volkswagen.

Hence, the correct answer is the option (D).