Shelley Is Maximizing Utility in Her Consumption of Mansions and Porsches

question 67

Multiple Choice

Shelley is maximizing utility in her consumption of mansions and Porsches. If the marginal utility of her last purchased mansion is twice the marginal utility of her last purchased Porsche, then we know

• A)Shelley buys twice as many mansions as Porsches.
• B)Shelley buys twice as many Porsches as mansions.
• C)Shelley buys more Porsches than mansions, but we do not know how many more.
• D)the price of a mansion is twice the price of a Porsche.
• E)the price of a Porsche is twice the price of a mansion.

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Definitions:

Marginal Cost

The extra expense associated with the production of an additional unit of a product or service.

Profit-Maximizing Price

The price at which a firm can maximize its profits, determined by the market structure and demand elasticity.

Profit-Maximizing Price

The price at which a company can sell its product to achieve the maximum possible profit.

Perm

A chemical hair treatment used to add curls or waves to the hair, or the city located in the European part of Russia, known for its cultural and historical significance.