A Consumer Likes Two Goods: Pizza and Beer

question 507

Multiple Choice

A consumer likes two goods: pizza and beer. The four bundles shown in the table below lie on the same indifference curve for the consumer. Which of the following statements regarding these bundles is correct?

• A)The goods are perfect substitutes for this consumer.
• B)The goods are perfect complements for this consumer.
• C)These bundles illustrate the property that indifference curves are bowed inward.
• D)These bundles violate the property that indifference curves do not cross.

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Definitions:

Conversion Costs

These are costs incurred during the manufacturing process to convert raw materials into finished products, including direct labor and factory overhead expenses.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life.

Factory Overhead

Costs associated with operating a factory that are not directly tied to a specific product, including maintenance, utilities, and salaries of supervisors.

Factory

A building or group of buildings where goods are manufactured or assembled primarily by machines.