Suppose You Want to Maximize Your Total Utility

question 7

Multiple Choice

Suppose you want to maximize your total utility. If your marginal utility per dollar spent is higher for one good than for all others, then you should:

• A)reallocate your spending away from that good.
• B)reallocate your spending towards that good.
• C)spend more on all goods.
• D)spend less on all goods.

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Definitions:

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) that are becoming the global standard for the preparation of public company financial statements.

Financial Statements

Documents that provide an overview of a company's financial condition, including income statement, balance sheet, and cash flow statement.

ROE

Return on Equity - a financial ratio that measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested.

Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated by dividing total liabilities by total assets.