Tyrell Has $50 Per Week to Spend on Good A

question 132

Multiple Choice

Tyrell has $50 per week to spend on good A, which has a price of $5, and good B, which has a price of $4. He buys six units of A and five of B. The marginal utility of the sixth unit of A is 25, and the marginal utility of the fifth unit of B is 20. Which of the following is true?

• A) He is maximizing his utility.
• B) We cannot tell if he is maximizing his utility unless we know his total utility.
• C) He is not maximizing his utility and should buy more of A.
• D) He is not maximizing his utility and should buy more of B.
• E) He is not maximizing his utility because he is not spending all of his income.

Calculate the minimum acceptable transfer price from a division's standpoint.

Analyze the financial impact of internal transfers versus external purchases.

Identify scenarios where internal transfers are financially beneficial for both divisions.

Assess the lost contribution margin from transferring products internally versus selling to outside customers.

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Definitions:

Landslides

The action of gravity pulling rocks, soil, or debris downward on a slope.

Reflected

Pertains to light, sound, or heat being thrown back by a surface without absorbing it.

Refracted

The process by which a wave, such as light or sound, changes direction as it passes through a boundary between two different media.

Interface

A surface forming a common boundary among two different phases, materials, or substances, in various scientific contexts.