Susan's Utility Function Is U(x, Y) = (X + Y)R²

question 34

Multiple Choice

Susan's utility function is U(x, y) = (x + y) R², where x and y are the quantities of goods X and Y that she consumes and R is the number of hours of leisure that she has per day. Good X costs 4 dollars per unit and good Y costs 2 dollars per unit. Her wage rate is 8 dollars per hour and she has 15 hours per day to allocate between labor and leisure. She will

• A) consume equal amounts of goods X and Y.
• B) consume 10 units of good X.
• C) consume 20 units of good Y.
• D) work 10 hours a day.
• E) consume twice as much of good X as of good Y.

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Definitions:

Cost Function

A mathematical relationship that describes how the costs incurred by a company vary with the level of output or production.

Cartel Arrangement

An agreement among competing firms in the same industry to control prices, limit output, or divide markets, in order to maximize profits collectively.

Manufacturing Plant

A facility that is equipped with machinery and staff for the purpose of producing goods on a large scale.

Cost Function

A mathematical relationship that describes how the total cost of production changes with varying levels of output.