Waldo's Utility Function Is U(x, Y)= Xy

question 5

Multiple Choice

Waldo's utility function is U(x, y) = xy.Waldo consumes 5 units of x and 25 units of y.

• A)Waldo would be willing to make small exchanges of x for y in which he would give up 5 units of x for every unit of y he got.
• B)Waldo would be willing to trade away all of his x for y as long as he got more than 5 units of y for every unit of x he gave up.
• C)Waldo likes x and y equally well so he is always willing to exchange 1 unit of either good for more than 1 unit of the other.
• D)Waldo will always be willing to make trades at any price if he does not have equal amounts of the two goods.
• E)None of the above.

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Definitions:

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given time period.

ABC Analysis

A method of categorizing inventory into three classes, A, B, and C, based on their value, volume, or frequency, to prioritize management focus and resources.

SKU

Stock Keeping Unit, a unique identifier for each distinct product and service that can be purchased.