Suppose a Consumer Is Spending All of His/her Income on Two

question 226

Multiple Choice

Suppose a consumer is spending all of his/her income on two goods, A and B, in a manner where MU_a = 15 and MU_b = 80, and the P_a = $5 and the P_b = $20. Then the consumer:

• A) is maximizing his/her utility.
• B) should increase his/her purchases of B and decrease the purchases of A.
• C) should spend more money on both goods.
• D) should spend less money on both goods.
• E) should increase the purchases of A and decrease the purchases of B.

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Definitions:

Human Capital

The total set of skills, understanding, and virtual assets owned by individuals that have the potential to create economic profits for the individuals, the companies they work for, or their local community.

Challenges and/or Opportunities

Situations that present difficulties requiring a response, or favorable circumstances that can lead to progress and growth.

Field of OB

The Field of OB, or Organizational Behavior, studies how individual behavior and group dynamics affect decision-making, performance, and culture within organizations.

Organizational Behavior Model

A framework used to understand and analyze how individuals behave within organizations, considering factors like structure, culture, and dynamics.