Total Utility Is Maximized in the Consumption of Two Goods

question 7

Multiple Choice

Total utility is maximized in the consumption of two goods by equating the:

• A) prices of both goods for the last dollar spent on each good.
• B) marginal utilities of both goods for the last dollar spent on each good.
• C) ratios of marginal utility to the price of both goods for the last dollar spent on each good.
• D) marginal utility of one good to the price of the other.

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Definitions:

Direct Materials

Raw materials that can be directly attributed to the manufacturing of a specific product and are an essential component in its production.

Office Equipment Depreciation

The process of allocating the cost of office equipment over its useful life, recognizing it as an expense on financial statements.

Direct Costs

Expenses that can be directly traced to the production of specific goods or services.

Indirect Costs

Expenses that are not directly tied to the production of goods or services, such as overhead, administration, and salaries.