Mr. Rational has 27 that he plans to spend purchasing 5 units of good X (priced at 3 per unit) and 6 ...

Mr. Rational has 27 that he plans to spend purchasing 5 units of good X (priced at 3 per unit) and 6 units of good Y (priced at 2 per unit). The marginal utility of the fifth unit of X is 30, and the marginal utility of the sixth unit of Y is 30 . If Mr. Rational is a utility maximizer, he should:
 a. not buy anything.
  b. buy more of X and less of Y.
  c. buy less of X and more of Y.
  d. buy X and Y in the quantities indicated.
  e. buy less of X and even lesser than that of Y.

QUESTION 2

You operate a factory that produces beach towels. Your current level of output equals 2,000 towels per week. Your weekly variable cost equals 8,000 . If your total cost each week equals 9,000 . it follows that:
 a. the average variable cost of production equals 2 per towel.
  b. the average variable cost of production equals 4 per towel.
  c. the average total cost of production equals 8 per towel.
  d. none of the above

QUESTION 3

A pervasive tradeoff in financial markets relates risk to expected returns. Which of the following statements reflects this relationship?
 a. The higher the risk of an asset, the lower the expected return on the asset.
  b. There is usually no relationship between risk and return.
  c. The higher the risk of an asset, the higher the expected return on the asset.
  d. The return on an asset is normally positively related to the risk of comparable assets.
  e. The return on a risky asset cannot be compared with the return on a risk free asset.

QUESTION 4

Suppose the prices of goods X, Y, and Z are 4, 1, and 5, respectively, and the last unit purchased of good X has a marginal utility MUx = 16 utils. At the point of equilibrium, the marginal utility of the last unit purchased of goods Y and Z will be:
 a. MUy = 16 utils and MUz = 16 utils, respectively.
  b. MUy = 8 utils and MUz = 2 utils, respectively.
  c. MUy = 4 utils and MUz = 20 utils, respectively.
  d. MUy = 2 utils and MUz = 4 utils, respectively.
  e. MUy = 12 utils and MUz = 20 utils, respectively.

QUESTION 5

You operate a factory that produces beach towels. Your current level of output equals 2,000 towels per week. Your weekly variable cost equals 8,000 . If your total cost each week equals 9,000 . it follows that:
 a. the average variable cost of production equals 2 per towel.
  b. the average total cost of production equals 4 per towel.
  c. the average total cost of production equals 4.50 per towel.
  d. the average total cost of production equals 8 per towel.

QUESTION 6

The financial amount that a risk averse person requires to take on risk is called:
 a. risk arbitrage.
  b. risk bonus.
  c. risk premium.
  d. risk capital.
  e. risk rate.