In the Goal of Consumer Optimization, It Is Assumed That

question 73

Multiple Choice

In the goal of consumer optimization, it is assumed that

• A)savings are positive.
• B)the consumer is rational.
• C)the consumer consumes more than his or her disposable income.
• D)consumption equals disposable income.
• E)more is preferred to less.

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Definitions:

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Marginal Revenue

The additional income gained from selling one more unit of a good or service.

Total Cost

The sum of fixed costs and variable costs incurred by a business in producing a particular level of output.

Industry Equilibrium Price

The price at which the total quantity demanded by consumers equals the total quantity supplied by firms in an industry.