If Callum Is Consuming His Utility Maximising Bundle and the Price

question 144

Multiple Choice

If Callum is consuming his utility maximising bundle and the price of one good rises, what happens to the marginal utility per dollar spent on this good (MU/P) , and what should Callum do?

• A)MU/P has increased, and Callum should buy more of this good.
• B)MU/P has increased, and Callum should buy less of this good.
• C)MU/P has decreased, and Callum should buy more of this good.
• D)MU/P has decreased, and Callum should buy less of this good.

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Definitions:

Conversion

The act of changing one form of securities into another, such as converting bonds into shares of stock, or the process of changing one currency into another.

Trading Securities

Financial securities that are purchased and held primarily for sale in the near term to generate income on short-term price differences.

Unrealized Holding

A profit or loss that arises from the change in value of an investment that has not yet been sold or realized.