Suppose at the Consumer's Current Consumption Bundle the Marginal Rate

question 72

Multiple Choice

Suppose at the consumer's current consumption bundle the marginal rate of substitution of cheese for wine is ½ bottle of wine per pound of cheese. The price of one pound of cheese is $6, and the price of a bottle of wine is $10. The consumer should increase his consumption of

• A) cheese, decrease his consumption of wine, and move to a lower indifference curve.
• B) cheese, decrease his consumption of wine, and move to a higher indifference curve.
• C) wine, decrease consumption of cheese, and move to a higher indifference curve.
• D) cheese, decrease consumption of wine, and remain on the same indifference curve.

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Definitions:

Cash Withdrawn

Funds taken out from a business by the owner(s) for personal use, which can affect the owner's equity account.

Customer's Account

An account representing a customer's relationship with a business, detailing their purchases, payments, and balances.

General Journal

A primary accounting record where all types of financial transactions are initially recorded using double-entry bookkeeping before posting to specific accounts in the ledger.

Closing Entries

Closing entries are journal entries made at the end of an accounting period to transfer temporary accounts to permanent accounts.