If Raul's Marginal Utility Per Dollar from Bread Is 25

question 8

Multiple Choice

If Raul's marginal utility per dollar from bread is 25 and the marginal utility per dollar from butter is 30,

• A) Raul should purchase more butter and less bread to increase his total utility.
• B) Raul's marginal utility from butter will fall if he buys more butter.
• C) Raul's marginal utility from bread will rise if he buys less bread.
• D) Only answers B and C are correct.
• E) Answers A, B, and C are correct.

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Definitions:

Materials Price Variance

The difference between the actual cost of materials and the expected (standard) cost.

Raw Material

The basic material from which a product is made, used in the initial stages of production.

Materials Price Variance

The difference between the actual cost of materials and the standard cost multiplied by the quantities purchased.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, based on the standard cost.