If the Average Utility of Good a Is 15 and the Average

question 33

Multiple Choice

If the average utility of good A is 15 and the average utility of good B is 25, you should:

• A) consume more of good A and less of good B.
• B) consume more of good B and less of good A.
• C) keep consuming the current amounts of both good A and good B.
• D) realize that you don't have enough information to answer the question.

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Definitions:

Price-Earnings Ratio

A valuation metric for a company, calculated by dividing the market price per share by the earnings per share.

Target Payout Ratio

The proportion of earnings a company plans to distribute to its shareholders as dividends, often expressed as a percentage.

Internal Rate

Short for Internal Rate of Return (IRR), it's a financial metric used to estimate the profitability of potential investments, calculated as the rate of return that sets the net present value of all cash flows from the investment equal to zero.

Required Return

The minimum return an investor expects to achieve on an investment, taking into account the risk level and other available opportunities.