When a Consumer Is Purchasing the Best Combination of Two

question 90

Multiple Choice

When a consumer is purchasing the best combination of two goods, X and Y, subject to a budget constraint, we say that the consumer is at an optimal choice point. A graph of an optimal choice point shows that it occurs

• A)along the highest attainable indifference curve.
• B)where the indifference curve is tangent to the budget constraint.
• C)where the marginal utility per dollar spent is the same for both X and Y.
• D)All of the above are correct.

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Definitions:

Current Liabilities

Obligations of a financial nature due in a year or during the usual business cycle.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the business's operating cycle, whichever is longer.

Operating Cash Flows

Cash generated from a company's regular business activities, indicating the company’s ability to generate sufficient cash to maintain and expand operations.

Net New Borrowings

The total amount of new debt a company takes on minus any debt repayments, indicating the net change in debt level.