The Price of a Hamburger Is $1 and the Price

question 234

Multiple Choice

The price of a hamburger is $1 and the price of a movie is $4 and the consumer has $10. A consumer has purchased 2 hamburgers and 2 movies, receiving 25 units of utility for the second hamburger and 100 units of utility for the second movie. The set of goods

• A) is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good.
• B) is an optimum since the entire income is spent and total utility is minimized.
• C) is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies.
• D) is not an optimum because the consumer has not spent all of his money.

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Definitions:

Recorded

The act of documenting financial transactions in the accounting records or ledgers of a company.

Adjusted Trial Balance

A financial statement that lists all accounts of a company and their balances after adjustments have been made.

Adjusting Entries

Journal entries made in accounting to update the records for revenues and expenses that have accrued but not yet been recorded through standard accounting transactions.

Prepaid Expenses

Costs paid in advance of their use, such as insurance or rent, which are recorded as assets on a balance sheet until they are actually incurred.