Alexandra Consumes Only Caviar and Champagne, but She Does Have

question 39

Multiple Choice

Alexandra consumes only caviar and champagne, but she does have a limited income of $400. Her current consumption choice is 5 ounces of caviar, at a price of $50 per ounce, and 6 bottles of champagne, at $25 each. The last ounce of caviar added 100 units to Alexandra's total utility, while the last bottle of champagne added 75 units. If Alexandra chooses 4 ounces of caviar and 8 bottles of champagne instead:

• A) her total utility will increase by 150 units
• B) her total utility will decrease by 150 units
• C) her total utility will increase by 100 units
• D) her total utility will decrease by 100 units
• E) her total utility will increase by 50 units

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Definitions:

Purely Competitive

Describes a market structure where many firms sell identical products, and no single seller can influence the market price.

Short Run

Within the field of economics, a timeframe where a company has at least one input that remains constant and unalterable.

Total Revenue

The entire revenue a company earns from selling products or services before deducting any costs.

Purely Competitive

A market structure characterized by many buyers and sellers, freely entering and exiting the market, with all firms selling identical or nearly identical products.