The Following Figure Shows the Indifference Curves (IC) and the Budget

question 103

Multiple Choice

The following figure shows the indifference curves (IC) and the budget constraint (BC) of a consumer who needs to decide between the number of trousers and shirts he should purchase.

-Refer to the figure above.Given the consumer's budget constraint,the consumption bundle that maximizes his satisfaction consists of ________.

• A) 0 shirts and 40 pairs of trousers
• B) 10 shirts and 30 pairs of trousers
• C) 20 shirts and 15 pairs of trousers
• D) 35 shirts and 10 pairs of trousers

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Definitions:

Real Price

The price of a good or service adjusted for inflation, reflecting its purchasing power relative to a specific base year.

Annual Inflation Rate

The percent increase or decrease in the general price level of goods and services over a period of one year.

Constant Dollar

A term used to describe a way of measuring economic statistics in which values are adjusted for inflation, allowing for comparison across different times.

Real Price

The price of goods or services adjusted for inflation, reflecting the actual purchasing power of money.