The Table Shows the Marginal Utility Schedules for Old Product

question 86

Multiple Choice

The table shows the marginal utility schedules for old product X and new product Y for a hypothetical consumer. The price of X is $2, and the price of good Y is $1. The budget of the consumer is $10. If the consumer buys both old product X and new product Y, how much will the consumer buy of each to maximize utility?

• A)2X and 3Y
• B)3X and 4Y
• C)4X and 3Y
• D)4X and 2Y

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Definitions:

Mutually Exclusive

Events or projects that cannot both occur at the same time, where the selection of one excludes the possibility of the other.

Independent

Not influenced or controlled by others in matters of opinion, conduct; not depending on another's authority.

Return on Assets

A financial ratio that shows the percentage of profit a company earns in relation to its overall resources (total assets).

Net Present Value

In capital budgeting, this refers to the variance between the current value of incoming cash and the current value of outgoing cash across a specific period, utilized to determine an investment's profit potential.