Tom Spends All His Income on Comics and Cola and Maximizes

question 72

Multiple Choice

Tom spends all his income on comics and cola and maximizes his total utility. If the price of a comic is $4 and the price of a can of cola is $1, then the ratio of the ________ is 4.

• A) marginal utility from cola to the marginal utility from comics
• B) marginal utility from comics to the marginal utility from cola
• C) number of comics Tom buys to the number of cola Tom buys
• D) total utility from comics to the total utility from cola

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Definitions:

Taxable Corporate Bond

A fixed-income security issued by a corporation that is subject to taxes on the interest income received by the bondholder.

Pretax Equivalent

Pretax Equivalent is a term used in finance to describe the gross amount of income or yield before taxes are deducted, useful for comparing investments with different tax treatments.

Uncollected Receivables

Amounts owed to a company by customers for goods or services delivered but not yet paid for.

Written Off

Refers to the elimination of an asset's value from a company's balance sheet due to it being unrecoverable or having no further use.