Suppose a Utility- Maximizing Person Consumes Only Two Goods, Hamburgers

question 27

Multiple Choice

Suppose a utility- maximizing person consumes only two goods, hamburgers and milkshakes. Suppose the price of milkshakes rises and all other variables remain constant. As a result, this person will certainly

• A) reduce his/her consumption of both milkshakes and hamburgers.
• B) not increase his consumption of both milkshakes and hamburgers.
• C) purchase more milkshakes and fewer hamburgers.
• D) increase his/her consumption of milkshakes.
• E) consume more hamburgers and the same amount of milkshakes.

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Definitions:

Stockholders' Equity

Stockholders' equity represents the residual interest in the assets of a corporation, after deducting liabilities.

Par Common Stock

The nominal or face value assigned to common stock shares, as stated in the corporate charter.

Total Impact

The overall effect or influence of something, often used to assess the comprehensive outcome of a decision, action, or event.

Cumulative Preferred

A type of preferred stock where dividends accumulate if not paid in a given period and must be paid out before any dividends can be distributed to common stockholders.