Assume That a Consumer Has a Given Budget or Income

question 4

Multiple Choice

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. If the consumer spent all of her budget on just apples or just bananas, how many apples or bananas maximum would she be able to buy?

• A)12 apples or 8 bananas
• B)8 apples or 12 bananas
• C)16 apples or 12 bananas
• D)8 apples or 16 bananas

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Definitions:

Federal Trade Commission

A U.S. government agency whose mission is to protect consumers and promote competition.

Misleading Advertising

Advertising that deceives or is likely to deceive the consumers, making them believe something about a product or service that is not true.

Insider Trading

Refers to illegal practice where trade of a company's stock is undertaken by people who have access to non-public, material information about the company.

Tying Contract

A requirement imposed by a seller that a buyer purchase another (or other) of its products as a condition for buying a desired product; a practice forbidden by the Clayton Act.