The Consumer's Optimum Choice Is Represented by

question 271

Multiple Choice

The consumer's optimum choice is represented by

• A)MU_x/MU_y = P_x/P_y.
• B)MU_x/P_x = MU_y/P_y.
• C)MRS_xy = P_x/P_y.
• D)All of the above are correct.

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Definitions:

Cash-flow Hedge

A form of hedge that protects against the variability in cash flows resulting from changes in currency rates, interest rates, or commodities prices.

Fair-value Hedge

A hedging strategy aimed at offsetting changes in the fair value of an asset or liability or an identified portion of such an asset or liability.

Other Comprehensive Income

Earnings that are not part of net income, arising from activities outside of the ordinary operations, and reported separately in equity.

Hedging Instrument

A financial contract used to offset potential losses or gains that may be incurred by a companion investment.