Eric Is Maximizing His Total Utility Through His Choices of Two

question 22

Multiple Choice

Eric is maximizing his total utility through his choices of two goods: clothes and food. His marginal utility of clothes is 60 and his marginal utility of food is 12. The price of clothes is $20. What must be the price of food?

• A) 12.
• B) 6.
• C) 4.
• D) 1.
• E) 0.

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Definitions:

Moral Judgment

The process of determining the rightness or wrongness of actions, often based on ethical principles.

Opportunity Costs

The cost of missing out on the top alternative by deciding on another option.

Scarce Resources

Natural, human, and artificial resources that are limited in supply and cannot satisfy all human wants and needs.

Secondary Effects

The unintended consequences of economic actions, which can occur as indirect results of a policy or event.