The Price of a Hamburger Is $1, the Price of a Movie

question 371

Multiple Choice

The price of a hamburger is $1, the price of a movie is $5, and the consumer has $13. A consumer has purchased 3 hamburgers and two movies, receiving 10 units of utility for the last hamburger and 10 units of utility for the last movie. The set of goods

• A) is an optimum since the entire income is spent and the marginal utility is the same for the last unit of each good.
• B) is an optimum because the consumer has maximized her utility given the limited income she had.
• C) is not an optimum because the marginal utility per dollar spent is greater for the hamburger than for the movie.
• D) is not an optimum because the marginal utility for the second hamburger was less than the marginal utility for the first hamburger.

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Definitions:

T Accounts

A type of graphical representation used in accounting to depict accounts, where the left side of the "T" records debits and the right side records credits.

Transactions

Financial events that involve the transfer of resources between two parties, impacting the financial position of an entity.

Cost Flow

The process of tracking the progression of costs as they move through a company's production process and into the financial statements.

Manufacturer

An entity or individual that makes goods from raw materials through the use of manual labor or machines, often within an industrial context.