Rational Utility Maximizers Tend To

question 81

Multiple Choice

Rational utility maximizers tend to:

• A)buy the same bundle of goods regardless of changing prices.
• B)choose the bundle of goods that maximizes their utility regardless of their income.
• C)change their consumption choices when either prices or income changes.
• D)change their consumption choices only when both prices and income changes simultaneously.

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Definitions:

Fixed Costs

Costs that remain constant regardless of the amount of products or services a company generates, including expenses like lease payments, wages, and premiums.

Break-even Point

The volume of production or sales at which total revenues equal total costs, resulting in neither profit nor loss.

Variable Cost

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the amount by which sales can drop before reaching a loss.