A Consumer Is in Equilibrium and Is Spending Income in Such

question 85

Multiple Choice

A consumer is in equilibrium and is spending income in such a way that the marginal utility of product X is 40 units and that of Y is 16 units. If the unit price of X is $5, then the price of Y must be

• A) $1 per unit.
• B) $2 per unit.
• C) $3 per unit.
• D) $4 per unit.

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Definitions:

Monetary Policy

The process by which the central bank or monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure economic stability.

U.S. Treasury Department

A federal government department responsible for managing government revenue, issuing currency, and supervising national banks.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Interest Rate

The cost of borrowing money, expressed as a percentage of the amount borrowed, or the return earned on invested funds.