Exhibit 6A-3 Consumer Equilibrium

question 121

Multiple Choice

Exhibit 6A-3 Consumer equilibrium
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-Given the budget line and indifference curves shown in Exhibit 6A-3, at point Z:

• A) P_x exceeds P_y.
• B) MU_x = MU_y.
• C) MRS = P_x / P_y.
• D) MRS = P_y / P_x.

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Definitions:

Variable Costing

An accounting method that only allocates variable costs to the inventory; fixed manufacturing overhead is expensed as incurred.

Cost Structure

The composition of a company's costs, both fixed and variable, that are incurred in the operation of its business.

Variable Costing

An accounting method that only considers variable costs - costs that change with production volume - in calculating the cost of goods sold.

Direct Materials Costs

The expenses for raw materials that are directly used in the manufacturing of a product.