Question

You go to an auction and set a maximum price of $100 you are willing to bid on an item. However, you are fortunate and purchase it for $50.

1) Does the lower price alter the marginal utility you originally placed on the item?
2) Is your potential total utility increased because of the lower price?

Answer 1

1) Under the most common utility functions, No. Price paid is independent of the marginal utility received.
2) Yes, Instead of getting the item for $100, you get the item plus have $50 to spend on something else.

(Note: in future posts, I suggest you let us know what you think the answer is. We would much rather critique your thinking than to just give you the answer right out.)

Answer 2

Thank you. I will remember the advice in the future:)