Table 10-2 Table 10-2 Above Shows Keira's Utility from Soup and Sandwiches

question 213

Multiple Choice

Table 10-2

Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods.
-Refer to Table 10-2.Holding prices constant, when Keira's income changed from $18 to $23, her utility maximizing bundle changed.Based on your answers to her optimal choices at the two income levels, what type of goods are soup and sandwiches?

• A)Soup is an inferior good and sandwiches are a normal good.
• B)Soup is a normal good and sandwiches are an inferior good.
• C)Both soup and sandwiches are normal goods.
• D)Both soup and sandwiches are inferior goods.

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Definitions:

Responsibility Accounting

An accounting system that measures the results of each responsibility center, allowing for more effective planning and control within an organization.

Responsibility Reporting

An accounting system that collects, summarizes, and reports financial information about different responsibility centers within an organization.

Investment Centers

Divisions or units within a company for which the manager has responsibility over costs, revenues, and investments.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.