Suppose That a Consumer Purchases a Combination of X and Y

question 47

Multiple Choice

Suppose that a consumer purchases a combination of X and Y such that MU_X/P_X = 15 utils per dollar and MU_Y /P_Y = 10 utils per dollar. To maximize utility, the consumer should buy

• A)less of X and more of Y.
• B)more of X and less of Y.
• C)more of both X and Y.
• D)less of both X and Y.
• E)neither X nor Y.

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Definitions:

Mean

The average of a set of numbers, computed by dividing the sum of these numbers by the count of numbers in the set.

Parameter λ

Often used to denote a rate parameter in exponential distributions which quantifies the frequency of occurrence for a given event.

Normally Distributed

A type of distribution for a variable where data are symmetrically distributed around the mean, showing a bell-shaped curve.

Average Balance

The mean amount of money held in an account over a certain period.