Josephine's Utility Function Is U(x, Y) = Y + 5x

question 52

Multiple Choice

Josephine's utility function is U(x, y) = y + 5x^.5. She has 1 unit of x and 2 units of y. If her consumption of x is reduced to zero, how much y must she have in order to be exactly as well off as before?

• A) 14 units
• B) 9 units
• C) 11 units
• D) 7 units
• E) None of the above.

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Definitions:

Process Costing

A costing method used in industries where production is continuous and units are identical, assigning costs to units of product based on the process they go through.

Inventory

An asset that represents the total amount of goods and or materials a company holds for sale or production in the normal course of business.

Equivalent Units

A concept in process costing that converts partially completed units into a number of equivalent full units.

Direct Method

An approach used in cost accounting or cost allocation in which costs are directly assigned to cost objects, such as departments or products, without any allocation of indirect costs.