Terry Buys 10 Pounds of Cheese and 12 Boxes of Crackers

question 6

Multiple Choice

Terry buys 10 pounds of cheese and 12 boxes of crackers each month.A pound of cheese costs $5 and a box of crackers costs $3.If she is maximizing her utility,what is her monthly income?

• A) $86
• B) $90
• C) $80
• D) There is not enough information to determine her monthly income.

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Definitions:

Competitive Price-taker Market

A market structure where sellers accept the market price as given, having no control over it due to perfect competition.

Long-run Equilibrium

A state in which all factors of production and costs are variable, allowing firms to enter or exit the market, ultimately resulting in no economic profit for the firms in a perfectly competitive market.

Zero Economic Profit

A situation where a firm's total revenue is exactly equal to its total costs, including opportunity costs.

Constant Cost

A situation where the cost of producing one additional unit of a good or service is the same, regardless of the volume produced.