Suppose the Price Of $A$ Is $\$ 20$ , the Price Of $B$

question 56

Multiple Choice

Suppose the price of $A$ is $\$ 20$ , the price of $B$ is $\$ 10$ , and that the consumer is currently spending all available income. At the consumer's current consumption basket the marginal utility of $A$ is 8 and the marginal utility of $B$ is 4 .

• A) The consumer is currently maximizing utility.
• B) The consumer could increase utility by consuming more of good \(A\) and less of \(\operatorname { good } B\).
• C) The consumer could increase utility by consuming more of good \(B\) and less of \(\operatorname { good } A\).
• D) Nothing can be said about the consumer's utility because we do not know the consumer's income or utility function.

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Definitions:

Fact-Finder

An unbiased party or an individual who examines all sides of an issue to determine the facts in a dispute before a decision is made.

Labor Dispute

A disagreement between employees and employers related to employment conditions, compensation, rights, or union activities.

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Advised solutions or agreements proposed to resolve disputes, often within a legal or formal conflict resolution process.

Arbitration

A dispute resolution process where an impartial third party makes a decision to settle a dispute outside of court.