If a Consumer Purchases a Combination of Commodities a and B

question 90

Multiple Choice

If a consumer purchases a combination of commodities a and b such that MUₐ/Pₐ = 100 and MUb/Pb = 80, to maximize utility, the consumer should buy:

• A) less of both a and b.
• B) more of a and less of b.
• C) less of a and more of b.
• D) more of both a and b.

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Definitions:

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash or stock.

Exchange Rate

The value of one currency for the purpose of conversion to another, indicating how much of one currency can be exchanged for another.

Shipping Charge

A fee imposed by a carrier for the handling and transportation of goods from one location to another.

U.S. Dollars

The official currency of the United States, used as a standard unit of money and backed by the federal government.