Peter Is Deciding Between Consuming Good X and Good Y

question 141

Multiple Choice

Peter is deciding between consuming Good X and Good Y.At his current level of consumption,his marginal utility per dollar for Good X is less than the marginal utility per dollar for Good Y.To achieve the consumer optimum,Peter needs to

• A) consume more of Good Y until the marginal utility per dollar for Good X is greater than the marginal utility for Good Y.
• B) consume less of Good X or more of Good Y until the marginal utility per dollar for Good X and Good Y is equal.
• C) consume more of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
• D) consume less of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
• E) continue at his current level of consumption.

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Definitions:

Long-run Cost Curve

A graphical representation of the costs incurred by a firm to produce different levels of output in the long run when all inputs are variable.

Production Costs

The total expense incurred in manufacturing a product or providing a service, including materials, labor, and overhead costs.

Manager Experience

The accumulated knowledge, skills, and competencies that an individual acquires through holding managerial roles over time.

Least Cost Combination

An economic principle where firms seek to minimize production costs by using the most efficient combination of resources.