Michael Kawamura, a Careful Utility Maximizer, Consumes Only Two Goods

question 338

Essay

Michael Kawamura, a careful utility maximizer, consumes only two goods, peanut butter and ice cream.He has just achieved the utility-maximizing solution in his consumption of the two goods when the price of peanut butter falls.As he adjusts to this event:
A.the marginal utility of peanut butter and of ice cream will rise.
B.the marginal utility of peanut butter and of ice cream will fall.
C.the marginal utility of peanut butter will fall, and the marginal utility of ice cream will rise.
D.the marginal utility of peanut butter will rise, and the marginal utility of ice cream will fall.

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Definitions:

Accounts Receivable

Amounts owed to a business by its customers for goods or services delivered on credit, expected to be collected in cash.

Notes Receivable

Financial assets representing amounts owed to the holder by the issuer that are supported by formal agreements or promissory notes.

Other Receivable

Amounts owed to a company by entities other than customers, such as tax refunds, advances to employees, or other companies.

Employee Advance

A prepayment to employees by a company, often covering travel expenses or payment before the regular payroll date.