If John Consumes Only Two Goods, a and B, and He

question 50

Multiple Choice

If John consumes only two goods, A and B, and he is maximizing his utility subject to his budget constraint,

• A) MUA/MUB equals the ratio of the price of A to the price of B.
• B) MUA/MUB equals 1.
• C) MUA/MUB equals the ratio of the total utility of A to the total utility of B.
• D) MUA/MUB is at a maximum.
• E) MUA/MUB equals zero.

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Definitions:

Random Sampling

A technique for selecting a sample from a population in a way that every member has an equal chance of being chosen.

Educated Guess

An assumption or prediction made based on known facts and logical reasoning, despite the absence of complete information.

Empirical Evidence

Information acquired by observation or experimentation that is used to confirm or disprove a hypothesis or theory.

Theory

A system of ideas intended to explain something, based on general principles independent of the thing to be explained.