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

question 75

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 rankings describes the consumer's preferences (first is highest ranked and last is lowest ranked) ?

• A)A-B-C-D
• B)A-D-B-C
• C)A-B-D-C
• D)We do not have enough information to rank all four bundles.

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Definitions:

Adjusted Basis

The original cost of an asset adjusted for improvements, depreciation, and certain tax-related adjustments used to calculate capital gains or losses.

Fair Market Value

An estimate of the market value of an asset or property, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller in the market.

Business Truck

A vehicle used for carrying goods related to a person’s business or commercial activities.

Holding Period

The length of time an investment is held by an individual or entity, affecting the tax treatment of any gains or losses.