Suppose That MU_Y = 15, MU_X = 10, P_Y =

question 53

Multiple Choice

Suppose that MU_Y = 15, MU_X = 10, P_Y = $2, and P_X = $1. Which of the following statements is TRUE?

• A) The consumer is maximizing utility.
• B) The consumer could increase utility by giving up 1 unit of good Y for 2 units of good X.
• C) The consumer could increase utility by giving up 2 units of good X for 1 unit of good Y.
• D) The consumer is receiving more marginal utility per dollar from good Y than from good X.

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Definitions:

Reacquisition

The process of a company buying back its own shares or bonds from investors.

Refunding

The process of replacing an old debt with a new one, usually with better terms, such as a lower interest rate.

Old Issue

A topic or problem that has been present or discussed for a long time.

New Bond Issue

The process of offering new bonds to investors for the first time to raise capital for the issuer.