Suppose a Consumer Has Preferences Over Two Goods, X and Y

question 262

Multiple Choice

Suppose a consumer has preferences over two goods, X and Y, which are perfect substitutes. In particular, two units of X is equivalent to one unit of Y. If the price of X is $1, the price of Y is $3, and the consumer has $30 of income to allocate to these two goods, how much of each good should the consumer purchase to maximize satisfaction?

• A)30 units of X and 0 units of Y
• B)0 units of X and 10 units of Y
• C)15 units of X and 5 units of Y
• D)15 units of X and 0 units of Y

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Definitions:

Long-Lived Assets

Assets that are expected to provide economic benefits over a period longer than one year, such as buildings and machinery.

Profit and Loss Comparisons

Analyzing and contrasting the income and expenses over different periods to understand financial performance trends.

Impairment Guidelines

Guidelines used to determine when an asset's carrying amount may not be recoverable, leading to the need to record an impairment loss.

Identifiable Cash Flows

Cash flows that can be directly associated with a specific project, investment, or division within a company, making it possible to assess its financial performance.