A Consumer Is Currently Spending All of Her Available Income

question 184

Multiple Choice

A consumer is currently spending all of her available income on two goods: music CDs and DVDs. At her current consumption bundle, she is spending twice as much on CDs as she is on DVDs. If the consumer has $120 of income and is consuming 10 CDs and 2 DVDs, what is the price of a CD?

• A)$4
• B)$8
• C)$12
• D)$20

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Definitions:

Urban Ethnic Neighbourhoods

Areas within cities that are predominantly inhabited by members of the same ethnic or cultural group, often retaining distinctive cultural traits.

Lowball Technique

A persuasive strategy where a more attractive offer is initially presented to get an agreement, then terms are made less favorable.

Feigned Scarcity

Feigned scarcity is a marketing strategy wherein the availability of a product is artificially limited to increase demand.

Reciprocity Norm

A social norm that dictates that we should repay, in kind, what another person has provided us, promoting the exchange of goods, services, and favors.