Betsy's Utility Function for BMWs and Money Is Given by 24,000x

question 12

Multiple Choice

Betsy's utility function for BMWs and money is given by 24,000x + y, where x is the number of BMWs she has and y is the amount of money she has. Her income is $32,000. Her reservation price for one BMW is

• A) $24,000.
• B) $24,000 - p.
• C) $24,000 - y.
• D) $8,000.
• E) $56,000.

---

Definitions:

Useful Life

The estimated period over which a fixed asset is expected to be useful to the owning entity, crucial for calculating depreciation.

Machine

Equipment or devices designed to perform specific tasks, often used in manufacturing and production processes.

Internal Rate

Commonly denotes the internal rate of return (IRR), the discount rate at which the net present value (NPV) of all cash flows from a specific project is zero.

Cash Operating

The process dealing with the direct cash flows from business operations, emphasizing a company's liquidity in the short term.