Juan spends all of his income on baseball cards and candy. At his current consumption bundle, the marginal utility of baseball c
1 answer:
Answer:
Juan should consume more baseball cards and less candy.
Explanation:
Juan spends all of his income on baseball cards and candy.
The marginal utility of baseball cards is 20 and the marginal utility of candy is 10.
The price of baseball cards is $10 and the price of candy is $2.
The total utility will be maximized if the ratio of marginal utility and price of a good is equal for both the goods.
The ratio for baseball cards
=
=
= 2
The ratio for candy
=
=
= 5
Since, the ratio is greater for candy and lesser for baseball cards, Juan should consume more baseball cards and less candy.
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Answer:
The entries are as follows
To record estimated returns on Sales
Debit: Sales Refund Payable Account $131,400
Credit: Accounts Receivables $131,400
To record estimated Cost of Sales returns
Debit: Inventory Returns Estimated Account $77,700
Credit: Inventory on Sales on Returns $77,700
Explanation:
To derive the figure for Sales Refund payable for the year
6% of $2,190,000
= = $131,400
To derive the figure for Inventory cost on Sales Refund payable for the year
6% of $1,295,000
= = $77,700