Kitty's Utility Function for BMWs and Money Is Given by 16,000x

question 11

Multiple Choice

Kitty's utility function for BMWs and money is given by 16,000x + y, where x is the number of BMWs she has and y is the amount of money she has. Her income is $23,000. Her reservation price for one BMW is

• A) $16,000 - y.
• B) $16,000 - p.
• C) $16,000.
• D) $7,000.
• E) $39,000.

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Definitions:

Stock Split

A corporate action that increases the number of a company's outstanding shares by issuing more shares to current shareholders, thus reducing the price of each share.

Shares

Units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.

Legal Entity

An organization that has legal rights and obligations, including the ability to enter into contracts and own property.

Stockholders' Equity

The residual interest in the assets of a corporation after subtracting liabilities, representing the ownership interest of shareholders.