Suppose a Utility-Maximizing Person Consumes Only Two Goods,hamburgers and Milkshakes

question 129

Multiple Choice

Suppose a utility-maximizing person consumes only two goods,hamburgers and milkshakes.Suppose the price of milkshakes rises and all other variables remain constant.As a result,this person will certainly

• A)purchase more milkshakes and fewer hamburgers.
• B)reduce his/her consumption of both milkshakes and hamburgers.
• C)consume more hamburgers and the same amount of milkshakes.
• D)not increase his consumption of both milkshakes and hamburgers.
• E)increase his/her consumption of milkshakes.

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Definitions:

Long Run

The long run is a period in economics where all factors of production and costs are variable, allowing companies to adjust all inputs.

Profit

The profit earned when the revenue obtained from a business operation surpasses the expenses, costs, and taxes required to maintain that operation.

Loss

A financial condition that occurs when expenses exceed revenues, implying a negative profit.

Price Discrimination

A pricing strategy where identical or substantially similar goods or services are sold at different prices by the same provider in different markets or to different customers.