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topjm [15]
4 years ago
5

Paul consumes only books and DVDs. At his current consumption​ bundle, his marginal utility from DVDs is 23 and from books is 5.

Each DVD costs ​$11​, and each book costs ​$3. Is he maximizing his​ utility?
Business
1 answer:
Paul [167]4 years ago
4 0

Answer:

Paul is not maximizing his utility because MUd/Pd is greater than MUb/Pb

Explanation:

Marginal utility is the extra satisfaction derived from spending an additional unit of money on consuming a particular product or service.

In order to determine if he is maximizing his utility, we must calculate his utility per dollar, and this is done by dividing his Marginal Utility by the price.

Marginal Utility per dollar of DVDs is:

MUd/Pd = 23/11 = 2.09

Marginal Utility per dollar of books is:

MUb/Pb = 5/3 = 1.67

Utility is maximized when MUd/Pd is equal to MUb/Pb and Paul has exhausted his budget.

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Because of marketing, we have more choices, better products, and lower prices.
Snezhnost [94]

Answer:

True

Explanation:

That  is true for any product but luxury products.

8 0
3 years ago
In a job order cost system, it would be correct in recording the purchase of raw materials to debit Finished Goods Inventory. Ra
Brilliant_brown [7]

Answer:

In a job order cost system, it would be correct in recording the purchase of raw materials to debit

Raw Materials Inventory.

Explanation:

When materials are initially purchased, the cost is debited to the Raw materials inventory account and credited to either Cash or Accounts Payable, depending on the trade terms.  When the materials are assigned to work in process, it is debited to Work in Process Inventory and to Jobs and credited to Raw materials Inventory.  Finished Goods Inventory is only debited for completed jobs.  Manufacturing Overhead is debited for all indirect costs.

4 0
3 years ago
Which of the following statements is TRUE?
dedylja [7]

Answer:B. The portfolio of smaller stock are typically less volatile than individual small stock.

C. On average smaller stock have lower return than larger stock.

Explanation:

The larger stock most times have a higher volatility than smaller stock and usually have better records of performance, this therefore makes their returns higher than lower stock.

On an average the volatility of a smaller stock is greater than that of a portfolio of smaller stock for the portfolio stock will compensate for one another to limit the volatility.

A treasury bill has a government guarantee, their return is therefore lower and same applies to their volatility when compared to smaller stock.

8 0
4 years ago
Which of the following is NOT one of the components of a firm's business model?
Kruka [31]

Answer: the industry competitors

Explanation:

A business model simply refers to the strategy that a company will use in making profit and achieving its goals.

The components of the business model of a company include the strategic resources, core strategy, partnership network, and the customer interface.

It should be noted that the industry competitors isn't among the components.

8 0
3 years ago
You expect a share of stock to pay dividends of $1.00, $1.25, and $1.50 in each of the three years. You believe the stock will s
Vladimir [108]

Answer:

$18.095417

Explanation:

To obtain the current stock price, bring all paid dividends and the stock selling price to present value at a 10% rate per year:

P=\frac{(1.00)}{(1+0.10)}+\frac{(1.25)}{(1+0.10)^2}+\frac{(20+1.50)}{(1+0.10)^3}\\P= \$18.095417

*Note that for the dividends paid after the first year, only one period was considered, and for the dividends paid after the second year, only two periods were considered.

The stock price is $18.095417

4 0
4 years ago
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