If a Consumer Purchases a Combination of Commodities X and Y

question 160

Multiple Choice

If a consumer purchases a combination of commodities x and y such that MUₓ/Pₓ = 30 and MUᵧ/Pᵧ = 40, to maximize utility, the consumers should buy.

• A) less of x and more of y.
• B) more of x and less of y.
• C) more of both x and y.
• D) less of both x and y.

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Definitions:

Delta

In finance, typically refers to the ratio comparing the change in the price of an asset, usually a derivative, to the change in the price of its underlying asset.

Time Value

The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.

February Put

An options contract giving the holder the right but not the obligation to sell a specified amount of an underlying asset at a predetermined price on or before a specified date in February.

Call Option

A financial contract giving the buyer the right but not the obligation to purchase a stock, bond, commodity, or other asset at a specified price within a certain time frame.