Hans Has $27 Which He Decides to Spend on X

question 60

Multiple Choice

Hans has $27 which he decides to spend on x and y. Commodity x costs $16 per unit and commodity y costs $10 per unit. He has the utility function U(x, y) = 5x² + 2y² and he can purchase fractional units of x and y. Hans will choose

• A) only x.
• B) only y.
• C) some of each commodity but more y than x.
• D) some of each commodity but more x than y.
• E) equal amounts of the two commodities.

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Definitions:

Lot Size

The quantity of items that are processed, ordered, or delivered at one time.

JIT Suppliers

Suppliers that adhere to Just-In-Time manufacturing principles, delivering materials and components exactly when needed, minimizing inventory costs.

Holding Cost

The cost associated with keeping inventory in storage, including expenses such as warehousing, insurance, and spoilage.

Product Storage

The act of keeping goods or materials in a designated space until they are needed for usage or sale.