If a Consumer Is at an Optimum, Consuming X and Y

question 19

Multiple Choice

If a consumer is at an optimum, consuming X and Y, and the price of X decreases, then to get to a new equilibrium the consumer must

• A) purchase less X.
• B) purchase less of both X and Y.
• C) purchase more X.
• D) purchase more of both X and Y.

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Definitions:

Economic Profits

Profits calculated by subtracting both explicit and implicit costs from total revenues, representing the additional value created beyond all resource costs.

Accounting Profits

The total revenue of a company minus the explicit costs and depreciation expenses.

Total Costs

Total costs represent the complete sum of all expenses incurred by a business in the production of goods or services, including both fixed and variable costs.

Variable Cost

Costs that change in proportion to the level of activity or volume of goods produced.