-Steve Has Two Goods He Can Spend His Income On

question 6

Multiple Choice

-Steve has two goods he can spend his income on, skiing and skating, and his marginal utilities from each are in the table above. The price of each unit of skiing is $10 and the price of each unit of skating is $5. Steve has $40 to spend. What quantities of skiing and skating should Steve consume to maximize his utility?

• A) 4 units of skiing and 4 units of skating
• B) 2 units of skiing and 4 units of skating
• C) 1 unit of skiing and 2 units of skating
• D) 5 units of skiing and 5 units of skating

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Definitions:

Automobile Production

The process and industry involved in the manufacturing and assembly of motor vehicles.

Corn Farming

The agricultural practice of cultivating corn or maize, used for various purposes including food, feed, and biofuel.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for some degree of market power.

Soft-Drink

A non-alcoholic beverage that is usually carbonated and flavored, such as sodas and colas.