Carl Has the Utility Function U(x,y)= 2xy

question 8

Multiple Choice

Carl has the utility function U(x,y) = 2xy. His indifference curve passing through the bundle (4,3) must also pass through the point where x is equal to 6 and y is equal to:

• A)12.
• B)24.
• C)2.
• D)10.

Calculate the margin of safety in both dollars and percentage terms.

Compute target profit analysis in unit and dollar sales.

Understand the implications of a change in total sales or sales mix on company profitability.

Determine the contribution margin ratio and its significance in break-even analysis.

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Definitions:

Interest

Payment received for the use of borrowed money, or the money paid for taking out a loan, often expressed as a percentage.

Utility Functions

Models used to quantify the satisfaction or utility a consumer derives from consuming various bundles of goods and services.

Consumption

The process or activity of using goods and services to satisfy wants or needs.

Cream

The fatty part of milk, gathered at the top, used in cooking or as a spread.