If the Price of a Good Is Zero, a Rational

question 323

Multiple Choice

If the price of a good is zero, a rational consumer will

• A) buy all of the units available.
• B) not consume the good at all since it must not be valuable if it has a zero price.
• C) stop consuming the good when total utility is maximized.
• D) consume the good up to the point where total utility is just below zero.

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Definitions:

Working Capital Ratio

The amount of current assets that would remain if all a company’s current liabilities were paid immediately; total current assets / total current liabilities.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement

a financial statement that shows a company's revenues and expenses, and thus its profit or loss, over a specific period of time.

Percentage of Net Change

A calculation that measures the difference in a financial figure over a period as a percent of its value at the start of the period.