Suppose That the Ratio of Marginal Utility to Price for Good

question 55

Multiple Choice

Suppose that the ratio of marginal utility to price for good is 10,and the ratio of marginal utility to price for good is 5.Assume that for her current consumption of goods and the consumer is experiencing diminishing marginal utility for each good.In order for this consumer to be at her utility maximizing point,she should

• A) consume less and more .
• B) consume more and less .
• C) consume more and more .
• D) do nothing - the consumer is already in equilibrium.

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Definitions:

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee but does not have full control.

Dividends

A portion of a company's earnings distributed to its shareholders, typically in the form of cash payments or additional shares.

Straight Line Amortization

A method of allocating the cost of an intangible asset over its useful life in equal installments.

Equity Method

An accounting technique used to record investments in which the investor has significant influence, but not control, over the investee.