A Consumer Is Making Purchases of Products Alpha and Beta

question 22

Multiple Choice

A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 30 and the marginal utility of product Beta is 40. The price of product Alpha is $5, and the price of product Beta is $10. The utility-maximizing rule suggests that, to stay within a given budget constraint, this consumer should

• A)increase consumption of product Beta and decrease consumption of product Alpha.
• B)increase consumption of product Beta and increase consumption of product Alpha.
• C)increase consumption of product Alpha and decrease consumption of product Beta.
• D)make no change in the consumption of Alpha or Beta.

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Definitions:

Maturity Value

The amount payable to an investor at the end of a debt instrument's life, including principal and interest.

Note Receivable

A financial asset representing a written promise for future amounts to be received, typically including interest by another party.

Promissory Note

A financial document in which one party promises in writing to pay a determinate sum of money to another party under specified terms.

Interest Calculation

The process of determining the amount of interest owed or earned over a specific period, based on the principal amount and the rate of interest.