Which of the Following Is (Are) True

question 113

Multiple Choice

Which of the following is (are) true?

• A) A budget constraint limits what a poor consumer can spend, but there is no similar constraint on rich people.
• B) Utility maximization requires seeking the greatest utility from a given budget.
• C) In consumer choice theory, we assume all goods and services are normal.
• D) All of the above are true.

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Definitions:

Fixed Expenses

Recurring costs that remain relatively constant regardless of business activity levels, including property leases and insurance premiums.

High-low Method

An approach to estimating the fixed and variable components of costs by analyzing the highest and lowest levels of activity.

Variable Cost

Costs that change in proportion to the level of production or sales volume, such as raw materials and direct labor.

Machine-hour

A unit of measure representing the operation of a machine for one hour, often used to allocate manufacturing overhead.