A Utility Maximizing Person Has a Utility Function Such That

question 44

Multiple Choice

A utility maximizing person has a utility function such that their marginal rate of substitution equals the amount of good Y they consume divided by the amount of good X that they consume (i.e.MRS = Y/X) .If the prices of goods X and Y are the same,then the person will

• A) consume more X than Y.
• B) consume more Y than X.
• C) consume equal amounts of X and Y.
• D) we must know the person's income before coming to a conclusion.

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Definitions:

Total Cost

The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.

Fixed Cost

A fixed cost is a business expense that remains constant regardless of the volume of goods or services produced by an entity.

Insurance Premiums

Payments made to an insurance company in exchange for coverage, protecting against financial losses from specified risks.

Production Workers

Employees involved in the direct manufacturing of goods, including assembly line workers, machine operators, and craftsmen.