Santiago Wants to Buy Some Milk and a Box of Cereal

question 6

Multiple Choice

Santiago wants to buy some milk and a box of cereal. If he buys 2 quarts of milk at $1 per quart, the box of cereal costs 75 cents. If he buys 3 quarts of milk at $1 per quart, the box of cereal is free. For Santiago, the marginal cost of the third quart of milk is

• A) zero.
• B) 25 cents.
• C) 75 cents.
• D) $1.

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Definitions:

Liquidity

The ability of an asset to be quickly converted into cash with minimal loss of value.

Efficiency

A measure of how effectively resources are used to achieve a goal or perform a process, often with minimal waste or time.

Short-term Obligations

Financial commitments or debts that are due to be paid within one year.

Past Performance

A review of an entity's previous achievements and results, often used to predict future success or potential.