If a Consumer Purchases a Combination of Commodities X and Y

question 97

Multiple Choice

If a consumer purchases a combination of commodities x and y such that MU_x/P_x = 20 and MU_y/P_y = 5, to maximize utility, the consumers should buy.

• A) more of x and less of y.
• B) less of x and less of y.
• C) more of both x and y.
• D) less of both x and y.

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Definitions:

Net Worth

The total assets of an individual or corporation minus total liabilities, indicating financial health or stability.

YTM

Yield to Maturity; the total return anticipated on a bond if it is held until it matures, considering all interest payments and the principal repayment.

Interest Rate Risk

The potential for investment values to change due to variations in interest rates, affecting especially bonds and other fixed income investments.

Bond Prices

The amount of money required to purchase a bond, which can fluctuate based on interest rates, credit quality, and other factors.