When the Marginal Utility Per Dollar of Good a Exceeds

question 98

Multiple Choice

When the marginal utility per dollar of good A exceeds the marginal utility per dollar of good B,

• A) the consumer should consume more of good A.
• B) the consumer is consuming too much of good A.
• C) good B must have a negative marginal utility.
• D) the consumer is in an optimal situation if the price of good A exceeds the price of good B.

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Definitions:

Fixed Costs

Expenses that do not change in total regardless of the level of production or sales volume.

Transfer Price

The price charged for goods or services transferred between divisions or branches of the same company.

Pump Division

A designated segment of a business focused on the production or sales of pumps.

Pool Products Division

A segment within a company focused on the development, production, and sales of products related to swimming pools.