John Is Currently Spending All of His Income

question 420

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 $5. 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:

Distribution to Partners

Refers to the distribution of profits, income, or assets from a partnership to its partners, typically in proportion to their ownership interests.

Managing Partner

A member of a partnership who has the authority and responsibility for managing the everyday operations of the business.

Partnership Assets

Assets or property owned jointly by partners in a business partnership, used for the business’s operations.

Fiduciary Duty

An obligation to act in the best interest of another party. For instance, a fiduciary duty exists between a trustee and the beneficiaries of the trust.