Suppose a Consumer Knows That at Her Current Bundle, MUx/Px

question 180

Multiple Choice

Suppose a consumer knows that at her current bundle, MUx/Px > MUy/Py. Is this individual choosing a bundle that maximizes utility? ​

• A)​Yes, because this individual values good X more than good Y.
• B)​Yes, because this individual values good Y more than good X.
• C)​No. This individual should shift consumption from good X to good Y.
• D)​No. This individual should shift consumption from good Y to good X.

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Definitions:

Variance

The difference between planned, budgeted, or standard cost and actual cost in accounting.

Standard Costs

The predetermined costs of manufacturing a product or providing a service, used for budgetary and performance evaluation purposes.

Standard Cost

A predetermined cost of manufacturing, serving, or marketing an item, which includes direct labor, direct material, and overhead charges.

Industry Average

A benchmark or norm for a specific industry, calculated as the average of a significant metric (like return on investment) across similar companies.