Which of the Following Correctly Identifies the Trade-Off That a Budget

question 80

Multiple Choice

Which of the following correctly identifies the trade-off that a budget constraint represents?

• A) The amount of income that must be given up to obtain an additional unit of a good
• B) The maximum amount of two goods that a consumer can purchase given his income
• C) The optimum combination of goods that a consumer with a given income should purchase
• D) The amount of one good that has to be given up to purchase an additional unit of the other good

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Definitions:

Cash Dividend

Cash or stock disbursement from a firm to its owners, typically stemming from the company's profits.

Bonds Payable

Long-term debt instruments issued by corporations or governments, promising to pay the bondholder a specified sum of money at future dates.

Direct Method

A way of preparing the cash flow statement where actual cash flows from operating activities are reported instead of adjustments to net income.

Sales Revenue

The total amount of money received by a company from selling goods or services before any expenses are deducted.