Murphy Used to Consume 100 Units of X and 50

question 21

Multiple Choice

Murphy used to consume 100 units of X and 50 units of Y when the price of X was $2 and the price of Y was $4.If the price of X rose to $4 and the price of Y rose to $9, how much would Murphy's income have to rise so that he could still afford his original bundle?

• A)$700
• B)$450
• C)$350
• D)$1,050
• E)None of the above.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, which may include the cost of bonds, loans, convertible debt, and lines of credit.

Interest Payable

The amount of interest expense that has been incurred during a period but not yet paid to creditors.

Adjusting Journal Entry

A type of entry made in the books of accounts to correct or update the financial statements to more accurately reflect the financial position of the business.

Prepaid Insurance Expense

An accounting term referring to payments made for insurance coverage before the coverage period starts, recorded as an asset on the balance sheet.