The Term Utility Maximization Means That

question 6

Multiple Choice

The term utility maximization means that

• A)individuals consume to gain as much utility as possible, given the limits of the budget constraint.
• B)total utility does not change with a change in income.
• C)once utility is at its maximum, leftover income can be saved.
• D)individuals consume the maximum amount of a good that the budget constraint makes possible.
• E)individuals maximize their usefulness to society.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating a company's fixed versus variable costs ratio.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.

Investment

The allocation of resources, such as capital or time, with the expectation of generating an income or profit.

Consumption Goods

Products and services that are used by individuals for personal enjoyment and satisfaction, not for further production.