Joaquim Has New Babies at Home, So He Cares Only

question 71

Multiple Choice

Joaquim has new babies at home, so he cares only about diapers and wipes. Joaquim's preferences are represented by U(D,W) = DW, where D is the number of diapers and W is the number of wipes that Joaquim purchases. Joaquim's preferences can also be represented by this utility function:

• A) U(D,W) = D^0.5W^0.5
• B) U(D,W) = D^0.5 + W^0.5
• C) U(D,W) = D + W
• D) U(D,W) = 0.5D + 0.5W

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in the level of activity or volume of production.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and salaries of production supervisors, not directly tied to the production of an individual product.

Spending Variance

The difference between the budgeted or standard cost of something and its actual cost, often analyzed in budgeting and cost control.

Units

The measures or quantities of a product, service, or resource, which are accounted for in business transactions.