Sharon Purchases Two Products with a Given Fixed Budget, Orange

question 298

Multiple Choice

Sharon purchases two products with a given fixed budget, orange juice and soda. Her marginal utility from orange juice is 60, and her marginal utility from soda is 30. The price of a bottle of orange juice is $2.00, and the price of soda is $1.00. These data suggest that

• A)Sharon is maximizing her utility from the given fixed budget.
• B)Sharon should buy more orange juice and less soda.
• C)Sharon should buy more soda and less orange juice.
• D)Sharon should buy less orange juice and soda.

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Definitions:

Generating Revenues

The process of bringing in income from business activities, sales, or services offered.

Drawing Account

An account used to track withdrawals made by the owner from the business for personal use.

Normal Balance

The side of an account (debit or credit) where increases to the account are recorded, depending on the account's nature.

Debit

An entry on the left side of an account, indicating an increase in assets or expenses or a decrease in liabilities, equity, or income.