Lulu Consumes Only Candy and Cookies; She Is Currently Buying

question 102

Multiple Choice

Lulu consumes only candy and cookies; she is currently buying more cookies than candy with her limited income.The last bag of candy gave Lulu the same additional utility as the last bag of cookies,and the prices of candy and cookies are the same.Lulu

• A)is maximizing utility given a limited income because the prices of candy and cookies are the same.
• B)is maximizing satisfaction given a limited income because the marginal utility per dollar is the same for candy and cookies.
• C)could get more satisfaction from the same income by buying more candy and less cookies.
• D)could get more satisfaction from the same income by buying more cookies and less candy.

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Definitions:

Compounded Monthly

The calculation of interest where the interest earned over a month is added to the principal, and this process is repeated every month.

Compounded Monthly

The process of adding interest to the principal sum of a loan or deposit, or in other words, interest on interest, on a monthly basis.

Compounded Annually

Interest on an investment or loan calculated once a year on both the initial principal and the accumulated interest from previous periods.

RRSP

Registered Retirement Savings Plan, a Canadian retirement savings vehicle that offers tax benefits.