If a Consumer Purchases a Combination of Commodities a and B

question 43

Multiple Choice

If a consumer purchases a combination of commodities a and b such that MU_a/P_a = 100
And MU_b/P_b = 80, to maximize utility, the consumer should buy:

• A) less of both a and b.
• B) more of a and less of b.
• C) less of a and more of b.
• D) more of both a and b.

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Definitions:

Numerically Measurable

Characteristics or quantities that can be quantified or expressed using numbers.

Budget Line

A graphical representation of all possible combinations of two goods or services that a consumer can afford given their income and the prices of the goods, reflecting budgetary constraints.

Price

The amount of money required to purchase a good or service, determined by factors such as supply, demand, and production costs.

Trade

The exchange of goods and services between individuals or entities, either within the same country or internationally.