Suppose the Price of Is $20,the Price of Is $10,and

question 27

Multiple Choice

Suppose the price of is $20,the price of is $10,and that the consumer is currently spending all available income.At the consumer's current consumption basket the marginal utility of is 6 and the marginal utility of is 4.

• A) The consumer is currently maximizing utility.
• B) The consumer could increase utility by consuming more of good and less of good
• C) The consumer could increase utility by consuming more of good and less of good .
• D) Nothing can be said about the consumer's utility because we do not know the consumer's income or utility function.

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Definitions:

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an equal and consistent manner.

Book Value

The net value of a company's assets found on the balance sheet, calculated as total assets minus intangible assets (patents, copyrights) and liabilities.

Residual Value

The estimated amount that an asset is worth at the end of its useful life.

Annual Depreciation Expense

Annual depreciation expense is the portion of the cost of a fixed asset that is expensed each year over its useful life, reflecting its decrease in value.