Nathalie Is Maximizing Total Utility While Consuming Food and Clothing

question 21

Multiple Choice

Nathalie is maximizing total utility while consuming food and clothing. Her marginal utility from food and clothing is 50 and 25, respectively. If clothing is priced at €10 per unit, the price of food must

• A) be rising.
• B) be falling.
• C) equal €10 as well.
• D) equal €20.

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Definitions:

Periodic Inventory System

An inventory system where updates to the inventory records are made periodically, often at the end of an accounting period, rather than after each transaction.

Cost of Goods Sold

The direct costs tied to the production of goods sold by a company, including materials and labor.

Credit Terms

Credit terms are the payment conditions set by businesses regarding when and how buyers should pay for goods or services, often specifying the period and any discount for early payment.

Early Payment Discount

An incentive offered by sellers to buyers for paying an invoice earlier than the stated due date to improve cash flow.