A Consumer Is in Equilibrium When

question 27

Multiple Choice

A consumer is in equilibrium when

• A) total utility can be increased only by reallocating his or her money income.
• B) the marginal utility for each commodity consumed is equal.
• C) all of his or her income has been spent on goods and services.
• D) any other allocation of his or her income among the commodities consumed leads only to a reduction in total utility.
• E) the total utility received from all commodities is the same.

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Definitions:

Setup Cost Per Unit

The cost associated with configuring or preparing equipment for manufacturing a batch of products, divided by the number of units produced.

Plantwide Overhead Rate

A single overhead absorption rate used throughout an entire plant or facility to allocate indirect costs to products.

Direct Labor Hours

The total hours worked by employees directly involved in the production of goods or delivery of services.

Departmental Overhead Rates

Overhead rates calculated for specific departments within a company, allowing for more accurate assignment of overhead costs to products.