Charles's Utility Function Is U(x, Y) = Xy

question 30

Multiple Choice

Charles's utility function is U(x, y) = xy. Anne's utility function is U(x, y) = 1,000xy. Diana's utility function is -xy. Elizabeth's utility function is . Fergie's utility function is xy - 10,000. Margaret's utility function is . Philip's utility function is x(y + 1) . (The goods x and y are two very expensive goods. We leave you to speculate about what they are.) Which of these persons have the same preferences as Charles?

• A) Everybody except Diana
• B) Anne and Fergie
• C) Anne, Fergie, and Elizabeth
• D) None of them
• E) All of them

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Definitions:

Fixed-Asset Turnover

A financial ratio that measures a company's efficiency in using its fixed assets to generate sales, indicating how well assets are being managed.

EVA

Economic Value Added is a measure of a company's financial performance based on the residual wealth calculated by deducting its cost of capital from its operating profit, adjusted for taxes on a cash basis.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Operating Income

The profit realized from a business's core operations, excluding deductions of interest and taxes.