A Utility-Maximizing Consumer Is Currently Spending All of His/her Income

question 146

Multiple Choice

A utility-maximizing consumer is currently spending all of his/her income on two products, A and B. The MU of the last unit of A consumed is 50, the price of A is $25, and the price of B is $10. The MU of the last unit of B consumed is:

• A) 50.
• B) 5.
• C) 2.
• D) 20.
• E) cannot determine from this limited information

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Definitions:

Geographic Proximate

The physical closeness or distance of places or entities, influencing interactions and relationships due to location.

Administrative Differences

Variations in the organization, procedures, or policies between different businesses, governments, or institutions.

Liability of Foreignness

The disadvantages or additional costs that firms operating outside their home countries incur, compared to local firms.

Natural Resources

Materials or substances that occur in nature and can be used for economic gain, such as minerals, forests, water, and fertile land.