John Is Currently Spending All of His Income

question 71

Multiple Choice

John is currently spending all of his income. For the last unit of Good A consumed John gets 20 utils and for the last unit of Good B consumed he gets 10 utils. The price of Good A is $10. The price of Good B is $1. If John wants to maximize his utility he should

• A) continue to purchase the same amount of Good A and Good B.
• B) increase the consumption of Good A and decrease the consumption of Good B.
• C) decrease the consumption of Good A and increase the consumption of Good B.
• D) decrease the consumption of Good A and decrease the consumption of Good B.

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Definitions:

Float

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Miller-Orr Model

A mathematical model used in finance to manage cash flow and determine the optimal level of cash balances for a firm.

BAT Model

A theoretical framework that outlines the potential consequences of Brexit across different sectors and regions.

Target Cash Balance

An optimal amount of cash that a company aims to hold to satisfy its operational and transactional requirements while minimizing holding costs.