Suppose One Big Mac Gives You a Marginal Utility of 500

question 12

Multiple Choice

Suppose one Big Mac gives you a marginal utility of 500 and a second Big Mac gives you a marginal utility of 200. The total utility of buying (and eating) two Big Macs is:

• A) 200.
• B) 300.
• C) 500.
• D) 700.

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Definitions:

Kilos

A kilo or kilogram is a metric unit of mass equal to 1000 grams, used worldwide for measuring weight.

Fixed Manufacturing Overhead Rate

A constant charge used to allocate fixed overhead costs to products or services, regardless of production volume.

Standard Cost System

A cost accounting system that uses standard costs for inventory valuation and as a tool for cost control.

Budgeted Activity

Planned or expected levels of operational activity, which may include sales volume, production quantities, or labor hours, for budgeting purposes.