As Long as the Marginal Utility Per Dollar from Pizza

question 176

Multiple Choice

As long as the marginal utility per dollar from pizza is greater than the marginal utility per dollar from soda, then to maximize utility a consumer will buy

• A) more soda to equalize the marginal utility per dollar between soda and pizza.
• B) less pizza and less soda.
• C) more pizza and less soda.
• D) equal amounts of pizza and soda.

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Definitions:

Contribution Margin Ratio

The ratio that represents what percentage of sales contributes to the covering of fixed costs, calculated by subtracting variable costs from sales revenue and dividing the result by sales revenue.

Operating Income

Earnings from a company's core business operations, excluding revenue and expenses from non-operating activities like investments.

Variable Costs

Costs that vary depending on a company’s level of activity.

Break-even Sales

The amount of revenue from sales needed to cover a company's fixed and variable costs, resulting in zero net income.