Jill,a Careful Utility Maximizer,consumes Peanut Butter and Ice Cream

question 171

Multiple Choice

Jill,a careful utility maximizer,consumes peanut butter and ice cream.Assume that both peanut butter and ice cream are normal goods.Right after she achieves the utility-maximizing level of consumption of the two goods,the price of peanut butter increases.After she adjusts to this event,the marginal utility of peanut butter goes _____ and that of ice cream goes _____.

• A)up;up
• B)down;down
• C)down;up
• D)up;down

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Definitions:

Federal Income Tax

An annual financial obligation required by the federal government from individuals, corporations, trusts, and other lawful entities.

Gross Earnings

The total amount of income received before any deductions or taxes are subtracted.

Net Pay

The amount of money received by an employee after all deductions have been made from the gross salary.

FICA Tax

Federal Insurance Contributions Act tax, which funds Social Security and Medicare, required to be paid by both employees and employers.