Basil Is Maximizing His Utility from Consuming Tea and Crumpets

question 142

Multiple Choice

Basil is maximizing his utility from consuming tea and crumpets.If the marginal utility of the last crumpet was 32 units of utility and the prices of tea and crumpets are $4 and $8, respectively, what was the marginal utility of the last cup of tea Basil consumed?

• A)2 units of utility
• B)12 units of utility
• C)$6
• D)128 units of utility
• E)16 units of utility

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Definitions:

Batch

A set of goods or materials processed or produced at the same time, often used in the context of batch processing.

Split-Off Point

That point in the manufacturing process where some or all of the joint products can be recognized as individual products.

Sales Value

The total revenue attained from goods or services sold, calculated by multiplying the selling price by the number of units sold.

Absorption Costing

A costing method where all manufacturing costs, both fixed and variable, are allocated to products, thus "absorbing" them into the cost of goods sold.