A Consumer Maximizes Utility, Given Her Income, When She Chooses

question 217

Multiple Choice

A consumer maximizes utility, given her income, when she chooses a consumption bundle whose:

• A) marginal utility of each good is equal.
• B) highest indifference curve is tangent to the budget line.
• C) marginal rate of substitution is highest.
• D) marginal utility of each good is highest.

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Definitions:

Income Before Income Taxes

Income before income taxes is a financial measure indicating the profitability of a company before accounting for its income tax expenses.

Partial Income Statement

A financial statement showing the revenues, expenses, and net income over a specific period, but not presenting the complete financial picture as a comprehensive income statement would.

Discontinued Operation Loss

A loss recognized when a segment of a business is closed or disposed of, and its operations will not continue.

Operating Expenses

These are the expenses related to the day-to-day functioning of a business, including costs such as rent, utilities, wages, and maintenance.