Lorenzo Lives on X and Y Alone

question 7

Multiple Choice

Lorenzo lives on x and y alone. His utility function is U(x, y) = min{ 3x + 4y, 7y}. The prices of both goods are positive. He will

• A) never buy more x than y.
• B) buy equal amounts of the two goods.
• C) always buy more y than x.
• D) always buy more x than y.
• E) More than one of the above is true.

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Definitions:

Average Revenue

The amount of income generated per unit of sale, calculated by dividing total revenue by the number of units sold.

Conceptually Equivalent

Referencing ideas, theories, or entities that are different in nature or appearance but equal in meaning or value.

Unit Price

The cost per unit of a product, which helps consumers compare prices and make purchasing decisions.

Total Revenue Curve

A graph that illustrates how a firm's total revenue changes as the quantity of goods sold changes, holding the price per unit constant.