First National's Consumer Leasing Department Placed an Ad in the Local

question 211

Multiple Choice

First National's consumer leasing department placed an ad in the local paper that pictured a car with the caption, "Sign a lease with us and pay only $275 per month." What other information must this ad have?

• A) A statement that the transaction is not a loan
• B) The total amount due at consummation or delivery, the number of payments required, and any required security deposit
• C) The bank's policy regarding the purchase of the property by the lessee
• D) Disclosures regarding required insurance

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Definitions:

Convex Preferences

A concept in consumer theory indicating that a consumer prefers average bundles of goods over extreme bundles, leading to smoother, convex indifference curves.

Strictly Convex

A term often used in mathematics and economics to describe a curve or function that curves away from the origin more sharply than a straight line, indicating increasing marginal effects.

Perfect Substitutes

Perfect substitutes are products or services that can be used in exactly the same way, offering the same utility to consumers, thus one can replace the other without loss of value or function.

Homothetic Preferences

Consumer preferences that are consistent or proportionate across different scales or levels of consumption, indicating a straight line through the origin in a utility function graph.