The Last Big Mac That Eva Consumes Costs $2

question 92

Multiple Choice

The last Big Mac that Eva consumes costs $2.00 and gives her 24 units of utility. The last Whopper she consumes costs $1.50 and gives her 18 units of utility. Eva is maximizing her utility. If the price of the Whopper falls to $1.30 and given diminishing marginal utility, Eva should:

• A) consume more Big Macs and fewer Whoppers.
• B) consume more Whoppers and fewer Big Macs.
• C) keep consuming the current amounts of both Big Macs and Whoppers.
• D) realize that she doesn't have enough information to answer the question.

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Definitions:

Annual Interest

The amount of money that is earned or paid on an investment or loan over a one-year period, expressed as a percentage of the principal.

Withdraw Amount

The act of removing funds from an account, investment, or savings.

Compounded Semi-annually

Interest calculation method where interest is added to the principal twice a year.

Down Payment

An upfront payment made when purchasing an item on credit, often a significant percentage of the total purchase price.