Arthur's Preferences Are Defined Over Two Basic Food Groups, Beer

question 64

Multiple Choice

Arthur's preferences are defined over two basic food groups, beer, x₁, and ice cream, x₂.His utility function is u(x₁, x₂) =x²₁+ x₂.He has $100 to spend, and each of these goods costs $10 per quart.

• A)Arthur will consume 5 quarts of ice cream and 5 quarts of beer.
• B)Arthur will find that 10 quarts of beer and no ice cream is the best bundle.
• C)Arthur will find that 10 quarts of ice cream and no beer is the best bundle.
• D)Arthur is indifferent between any two points on the line that connects (5, 5)and (10, 10).
• E)Arthur will spend 2/3 of his income on beer and 1/3 of his income on ice cream.

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Definitions:

Marginal Tax Rates

The rate at which the last dollar of income is taxed, showing the percentage of tax applied to your income for each tax bracket.

Total Tax

The comprehensive sum of all taxes a person or entity is liable to pay, including federal, state, local, and other forms of taxes.

Provincial Tax Brackets

The divisions at which tax rates change in a progressive tax system within specific provinces or territories.

Non-Eligible Dividends

Dividends that do not qualify for the dividend tax credit in certain jurisdictions, typically paid by companies that pay tax at a rate that is lower than the standard corporate tax rate.