Answer the Question on the Basis of the Following Two

question 280

Multiple Choice

Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. If the consumer has money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing

• A)3 units of J and 7 units of K.
• B)5 units of J and 5 units of K.
• C)4 units of J and 5 units of K.
• D)6 units of J and 3 units of K.

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Definitions:

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit.

Marginal Cost

The cost of producing one additional unit of a product or service.

Average Variable Cost

Average Variable Cost is the variable cost per unit of output, calculated by dividing total variable costs by total output, illustrating how variable costs change with output levels.

Output

The total amount of goods or services produced by a person, machine, factory, country, etc., within a particular time period.