If, for a Particular Consumer, the Marginal Utility of Ties

question 239

Multiple Choice

If, for a particular consumer, the marginal utility of ties is greater than the marginal utility of shirts, this consumer should:

• A) buy more ties and fewer shirts.
• B) buy more shirts and fewer ties.
• C) buy the same amount of each.
• D) not do anything until more information is available.

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, remaining constant regardless of the amount of output or sales.

Sunk Cost

A past expenditure that cannot be recovered and should not be considered when making future investment decisions.

Nonrefundable

A term used to describe payments or fees that cannot be returned to the payer under most circumstances.

Nontransferable

A characteristic of certain rights or privileges that cannot be legally transferred from one individual or entity to another.