Due to a Budget Constraint, Ethan Is Unable to Purchase

question 26

Multiple Choice

Due to a budget constraint, Ethan is unable to purchase as many video games and movies as he would like. Therefore, Ethan's best option is to purchase:

• A) only movies in the short run.
• B) only video games in the short run.
• C) nothing until his next paycheck.
• D) the combination that will give him the most utility.

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Definitions:

Other Income

A financial term referring to income generated from activities not directly related to the entity's primary business operations.

Other Expense

Expenses that do not fit into the usual categories of operating expenses in a business, such as lawsuit settlements or loss on asset disposal.

Redemption

In finance, refers to the repayment of a debt security or preferred stock at or before its maturity date. In the context of investments, it can also mean the selling of mutual fund shares back to the fund.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a specified call price.