Economics (AS & A Level) · Oct / Nov 2022 · Paper 33 · Question 4

The diagram shows the market price and equilibrium quantity of coffee consumed by an individual, Jo. Jo buys X cups of coffee at $2 per cup when she visits her favourite café. [diagram: price/quantity axes with supply and demand curves intersecting at price 2 and quantity X; demand curve meets quantity axis at Y] When she is there, the café owner says it is offering unlimited free refills. How is her consumption most likely to change?

1. AJo's demand for coffee will increase from X to Y where her total utility for coffee is zero.
2. BJo's demand for coffee will increase from X to Y where her marginal utility for coffee is zero.
3. CJo will not drink extra coffee because its marginal utility is less than $2.
4. DJo will not drink extra coffee because her total utility will fall.

As printed in the paper