Katie Finds That the Marginal Utility from a Compact Disc

question 118

Multiple Choice

Katie finds that the marginal utility from a compact disc is 30 and the marginal utility from a pizza is 10. The price of a compact disc is $15 and the price of a pizza is $10. In order to increase her utility, Katie should

• A) consume more compact discs and fewer pizzas.
• B) consume fewer compact discs and more pizzas.
• C) not change her consumption of pizza and compact discs.
• D) consume fewer compact discs and fewer pizzas.

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Definitions:

General Journal

A basic accounting record for entering all types of transactions before they are transferred to specific accounts in the general ledger.

Financial Statement

Documents that report on a company's financial performance and health, including the balance sheet, income statement, and cash flow statement.

Normal Balance

is the side of an account on which increases to the account are recorded, typically either a debit for assets and expenses or a credit for liabilities, equity, and revenues.