(Figure: Prune Juice and Apple Juice I) Refer to Figure

question 127

Multiple Choice

(Figure: Prune Juice and Apple Juice I) Refer to Figure 5.8, depicting the consumer's indifference curves and budget constraints. Suppose the consumer has $20 of income to spend on apple juice and prune juice. Which of the following statement(s) is (are) TRUE? I. At $2 per quart, the consumer buys 3 quarts of apple juice.
II) At $4 per quart, the consumer buys 3 quarts of apple juice.
III) At $1.33 per quart, the consumer buys 6 quarts of apple juice.
IV) At $0.75 per quart, the consumer buys 6 quarts of apple juice.

• A) I and II
• B) II and III
• C) II and IV
• D) I

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Definitions:

Income Ratio

A metric used to assess the profitability of a company, often calculated as net income divided by total revenues or sales.

Unlimited Life

An accounting concept referring to corporations that continue to exist irrespective of the status or continuity of their owners.

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The legal responsibility to settle financial debts or obligations resulting from lawsuits or breaches of contract.

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