Justin Consumes Goods X and Y and Has a Utility

question 61

Multiple Choice

Justin consumes goods x and y and has a utility function U(x, y) = x² + y. The price per unit of x is p_x and the price per unit of y is p_y. He has enough money so that he can afford at least 1 unit of either good. When he chooses his best affordable bundle,

• A) his budget line must be tangent to the indifference curve passing through this bundle.
• B) he must consume only x.
• C) he must consume only y ifexceeds his income.
• D) he must consume some of each good if p_x = p_y.
• E) he must consume some of each good if.

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Definitions:

Fiscal Policy Measure

Government policies related to taxation and spending that are used to influence the economy, manage inflation, and stimulate economic growth.

Legislative Action

The process by which a legislative body enacts laws, including the proposal, debate, amendment, and voting on new laws or changes to existing laws.

President

The head of state and/or head of government in a republic, typically elected to be the chief executive officer and hold the highest office in the land.

Multiplier

An economic factor that quantifies the additional economic activity generated from an initial injection of spending.