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:

Rebates

A partial refund to someone who has paid too much for tax, rent, or a utility, or as a promotional incentive offered by manufacturers or retailers after purchase.

Samples

Small quantities or instances of a product or material used for testing, evaluation, or demonstration purposes to gauge its characteristics or the population’s response.

Controlled Experiments

A research method where variables are manipulated to observe the effect on a dependent variable, often used to establish causal relationships.

Product Samples

Small quantities of a product given away for free to customers for the purpose of trial and evaluation.