Suppose That a Consumer Has Utility Function U= Ax²y² with

question 16

Multiple Choice

Suppose that a consumer has utility function U= Ax²y² with MU_x = 2Ay²x and MU_y = 2Ax²y. Which of the following statements is false?

• A) The marginal utilities are positive.
• B) The marginal rate of substitution is diminishing.
• C) The indifference curves are bowed away from the origin.
• D) The indifference curves are downwards sloping.

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Definitions:

Contribution Format

A method of income statement presentation that separates fixed costs from variable costs to highlight the contribution margin.

Reconciliation Method

A process used in accounting to ensure that two sets of records (usually the balances of two accounts) are in agreement.

Absorption Costing

A calculation method for product pricing that includes all components of manufacturing costs—direct materials, direct labor, both variable and fixed overheads— into the product's overall cost.

Net Operating Income

The profit generated from a business's operations after subtracting operating expenses but before deducting interest and taxes.