Suppose Sirach Knows That the Price of Doughnuts Is $3

question 12

True/False

Suppose Sirach knows that the price of doughnuts is $3 and the price of cupcakes is $4.He also knows that the next doughnut he consumes will increase his total utility by 6 utils and the next cupcake will increase his total utility by 10 utils.Assuming he has enough money to buy either,Sirach should buy a doughnut next.

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Definitions:

Variable Costs

Costs that change in proportion to the level of production or sales activities of a business.

Fixed Costs

Business expenses that remain constant regardless of the level of goods or services produced.

Unit Variable Cost

The financial outlay linked to the creation of one more unit of a product.

Break Even

The point at which total costs and total revenue are equal, meaning that a business or investment is neither making a profit nor a loss.