If the MU\P Ratio for Two Goods Is the Same

question 170

Multiple Choice

If the MU\P ratio for two goods is the same, then

• A)the slope of the budget constraint between the two goods is equal to the marginal rate of substitution (MRS)between the two goods.
• B)the indifference curve between the two goods is concave to the origin.
• C)the prices of the two goods are the same.
• D)it follows that consumers prefer fewer goods to more goods.

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Definitions:

Direct Labor Cost

The expense associated with the work performed by employees directly involved in the manufacturing process of products.

Manufacturing Overhead

All manufacturing costs that are not directly associated with the production of goods, including costs related to indirect labor, materials, and facility.

Direct Materials Costs

The expense incurred for raw materials that are directly traceable and allocable to a finished product.

Predetermined Rate

A rate calculated before a period begins, used to allocate costs or apply charges in various accounting practices.