Adhira Buys Chocolates and Almonds

question 131

Multiple Choice

Adhira buys chocolates and almonds.She has 3 bars of chocolates and 4 bags of almonds.The marginal utility of the third chocolate bar is 18 units of utility and the marginal utility from the fourth bag of almonds is also 18.Is Adhira maximizing her utility?

• A) Yes, the marginal utility from the last unit of each good is equal.
• B) No, she must buy 1 more chocolate bar to equate her quantities of the two goods.
• C) No, she must buy cut back to 3 bags of almonds to equate her quantities of the two goods.
• D) No, without information on her income and the prices of the two goods, we cannot answer the question.

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Definitions:

Contractual Interest Rate

The interest rate stated on the face of a loan or bond agreement, which represents the percentage of interest that the borrower must pay to the lender.

Premium

The amount paid for an insurance policy or the amount by which a bond or stock sells above its face value.

Discount

A reduction from the usual cost of something, often used to encourage prompt payment or increase sales.

Market Interest Rate

The prevailing rate of interest that borrowers and lenders can expect to transact at in the broader financial market, influenced by supply and demand.