Assume you are spending your full budget and purchasing such amounts of X and Y that the marginal utility from the last units consumed is 40 and 20 utils respectively. Assume (a) the prices of X and Y are $8 and $4 respectively; (b) it takes 3 hours to
consume a unit of X and 1 hour to consume a unit of Y; and (c) your time is worth $2 per hour. You:
A. should substitute X for Y until the marginal utility per hour is the same for both products.
B. are consuming X and Y in the optimal amounts.
C. should consume less of Y and more of X.
D. should consume less of X and more of Y.
Answer: D
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What characteristic of a competitive market has made the "long run pretty short" in the market for iPhone applications?
A) few firms in the market B) ease of entry C) blocked entry D) identical products
Ways to "game" the budgeting process include
a. delaying sales if just short of a target b. accelerating expenses if just short of a target c. delaying sales once a target is met d. delaying expenses costs once a target is met