Mike's income is $600 per month. He spends all of it on books (B) and CDs (C). Books cost $10 and CDs cost $15. His preferences correspond to the utility function U(B,C) = B × C. For that utility function, the marginal benefit of books is C and the marginal benefit of CDs is B. How many books and how many CDs will he purchase in a month?

A. 20 CDs and 30 Books

B. 60 CDs and 10 Books

C. 15 CDs and 40 Books

D. 30 CDs and 15 Books


A. 20 CDs and 30 Books

Economics

You might also like to view...

The tool that economists use to analyze the mutual interdependence of oligopolies is

A) economies of scale. B) the four-firm concentration ratio. C) game theory. D) the HHI. E) the efficient scale.

Economics

If the efficient-market hypothesis is true, then the idea of:

A. herd instinct holds. B. herd instinct doesn't always hold. C. tulip mania holds. D. tulip mania doesn't always hold.

Economics

The cost of a hospital stay has been going down slowly

a. True b. False Indicate whether the statement is true or false

Economics

Suppose the government levies a "fat tax" on naturally-sweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the

a. ability-to-pay principle. b. benefits principle. c. vertical-equity principle. d. horizontal-equity principle.

Economics