Maximilian Consumes Two Goods, X and Y

question 15

True/False

Maximilian consumes two goods, x and y.His utility function is U(x, y)= max{x, y}.Therefore x and y are perfect substitutes for Max.

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Definitions:

NPV

Net Present Value; a financial metric used to assess the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows.

IRR

Internal Rate of Return; the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero, used in capital budgeting to measure the profitability of an investment.

Cash Flows

The total amount of money being transferred into and out of a business, particularly affecting liquidity.

Replacement Proposal

A plan to replace an existing asset or system with a new one, often evaluated based on cost, efficiency, and potential benefits.