Alfred Derives Utility from Consuming Iced Tea and Lemonade

question 56

Multiple Choice

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 the above is necessarily correct.

---

Definitions:

Financing Activities

Transactions a company undertakes to finance its business operations, including issuing bonds, stocks, and paying dividends.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, as reported in the cash flow statement.

Net Change In Cash

The difference in a company's cash and cash equivalents at the beginning and end of a financial period, reflecting its overall cash flow health.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of its inventory management.