Cecil Consumes X₁ and X₂ in Fixed Proportions

question 26

Multiple Choice

Cecil consumes x₁ and x₂ in fixed proportions. He consumes A units of good 1 with B units of good 2. To solve for his demand functions for goods 1 and 2,

• A) setand solve for x₁.
• B) solve the following two equations in two unknowns: Ax₁ = Bx₂ and p₁x₁ + p₂x₂ = m.
• C) solve the following two equations in two unknowns: Bx₁ = Ax₂ and p₁x₁ + p₂x₂ = m.
• D) you only need to use the equation given by his budget line.
• E) use the fact that he spends all of his income on good 1 so long as it is the cheaper good.

---

Definitions:

Job Order Cost System

This system is a cost accounting method that assigns costs to specific production batches or jobs, making it easier to track the financial resources spent on each job.

Underapplied Manufacturing Overhead

The situation where the allocated manufacturing overhead costs are less than the actual costs incurred.

Overapplied Manufacturing Overhead

The condition where the allocated manufacturing overhead costs exceed the actual overhead expenses incurred during a period.