Carlos Consumes Only Two Goods, Apples and Bananas

question 10

Multiple Choice

Carlos consumes only two goods, apples and bananas.His utility function is given by U(x, y) =a³b².He is endowed with w_a apples and w_b bananas.Unaware that prices are about to change, Carlos buys the quantities of apples and bananas that maximize his utility subject to his budget constraint.After he has made his purchases but before he has eaten them, the relative prices change.Carlos is then free to make further trades at the new relative prices if he wishes.

• A)Carlos will definitely be better off after the price change.
• B)Carlos will definitely be worse off after the price change.
• C)Carlos will be better off after the price change if the price of the good for which he is a net seller rises relative to the price of the other good.
• D)Carlos will be better off after the price change if the price of the good for which he is a net buyer rises relative to the price of the other good.
• E)Carlos's utility will not be affected by the price change.

Recognize the consequences of an agent's actions on the principal's liability, including in tort and contract scenarios.

Understand the principle of respondeat superior and its application.

Learn the rules governing the termination of an agency relationship.

Identify the responsibilities and liabilities associated with hiring practices and the torts committed by employees.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the business’s operating cycle, whichever is longer, such as cash, inventory, and receivables.

Direct Method

In cash flow reporting, a format that presents major classes of gross cash receipts and payments, providing transparency into a company's operating cash flows.

Operating Activities

Activities that constitute the primary or main activities of a business, such as selling goods or providing services.

Cash Collections

Cash collections involve the process of gathering all payments or receipts in cash form, typically from customers or clients.