John and Sally Have Identical Preferences Except Sally's Utility Units

question 76

Multiple Choice

John and Sally have identical preferences except Sally's utility units are exactly 10 times that of John's.Both have the same income and face the same prices.Choose the best response.

• A)John consumes 10 times the amount that Sally consumes.
• B)John receives 1/10 the satisfaction that Sally receives.
• C)Both will consume the same amount of all goods.
• D)John and Sally will have equal total utility.
• E)John and Sally will have equal marginal utility.

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Definitions:

Variable Cost

Expenses that vary depending on the amount of products or services a company generates.

Fixed Costs

Expenses that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.

Cash Flow

The full measure of money movement into and out of an organization, primarily altering its liquidity status.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows, reflecting the risk and time value of money.