Please Consider the Following Figure: the Consumer Chooses a on Budget

question 65

Multiple Choice

Please consider the following figure: The consumer chooses A on budget line I1 and B on budget line I2. Which of the following statements is NOT true?

• A) A is preferred to B.
• B) B is preferred to C.
• C) C is preferred to D.
• D) A is preferred to C.

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Definitions:

Risk Averse

A descriptive term for investors or individuals who prefer lower risk or uncertainties, often choosing investments with smaller potential returns to avoid losing money.

Retirement Savings Plan

A retirement savings plan is a financial arrangement designed to replace employment income upon retirement, which can include various types of accounts like 401(k)s and IRAs.

Tax-exempt Saving

An investment account or product that offers tax benefits, such as no taxation on the interest or profits earned.

529 Plan

A tax-advantaged savings plan designed to encourage saving for future education costs, including tuition, fees, and room and board.