Assume That the Ratio of the Marginal Utility of Bread

question 88

Multiple Choice

Assume that the ratio of the marginal utility of bread to the marginal utility of butter is 2,and that the price of bread is equal to the price of butter.Brad can increase his welfare by consuming

• A) more bread only.
• B) more bread and more butter.
• C) more butter only.
• D) less bread.
• E) more bread and less butter.

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Definitions:

Opportunity Cost

The expense of not choosing the second-best option while making a choice.

Machinery

Mechanical devices or assemblies, often powered by electricity or engines, that perform specific tasks, commonly used in industries for production processes.

Petroleum

A natural, flammable liquid found in the Earth's formations, composed of a complex mixture of hydrocarbons and used primarily as fuel.

Opportunity Cost

The value of the best alternative forgone when a decision is made to pursue a particular course of action.