Use the Following to Answer Questions

question 54

Multiple Choice

Use the following to answer questions :
-(Table: Utility from Burgers and Milkshakes) Use Table: Utility from Burgers and Milkshakes.David's marginal utilities for milkshakes and burgers are given in the table.The price of milkshakes is $2,and the price of burgers is $5.If David's income is $10,to maximize his utility,he buys _____ shake(s) and _____ burger(s) .

• A) one;one
• B) no;two
• C) five;no
• D) two;one

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can increase its profits by increasing sales, given its fixed costs.

Scenario Analysis

A process of analyzing possible future events by considering alternative possible outcomes (scenarios), thus helping in the decision-making process.

Net Present Value

A calculation that compares the value of all cash inflows and outflows of a project or investment, discounted back to their present value.

Worst Case Scenario

The most adverse or negative outcome that can occur in a given situation.