Use the Indifference Curves and the Budget Lines in Figure

question 73

Multiple Choice

Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the price of Y is $1 per unit. In Figure 19.3, given an income of $30 and a price for good Y of $1, which of the following two points represent optimal consumption?

• A) A when the price of X is $3 and C when the price of X is $1.
• B) B when the price of X is $1 and D when the price of X is $3.
• C) A when the price of X is $1 and D when the price of X is $3.
• D) B when the price of X is $1 and C when the price of X is $3.

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Definitions:

Liquidator's Power

Refers to the authority granted to a liquidator to manage and sell a company's assets, pay off creditors, and distribute any remaining assets to shareholders during the process of winding up a company.

Shareholders Before Creditors

This principle dictates that in the hierarchy of corporate structure, shareholders' equity is ranked lower than the claims of creditors in the event of a liquidation.

Ordinary Unsecured Creditor

A creditor who has no special rights to assets of a debtor in the event of the debtor's bankruptcy.

Trade Creditors

Entities to whom money is owed for goods and services provided on credit as part of normal business operations.