In Problem 2, Ambrose Has the Utility Function U(x₁, X₂)

question 25

Multiple Choice

In Problem 2, Ambrose has the utility function U(x₁, x₂) . If Ambrose were initially consuming 9 units of nuts (good 1) and 21 units of berries (good 2) , then what is the largest number of berries that he would be willing to give up in return for an additional 16 units of nuts?

• A) 26
• B) 5
• C) 8
• D) 4
• E) 2

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Definitions:

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the current market price by the earnings per share.

Earnings per Share

This refers to the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.

Liquidity

The ability of an asset to be quickly converted into cash without significant loss in value, essential for assessing the financial health of businesses.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's receivables are turned into cash over a period.