-Refer to the Above Table

question 201

Multiple Choice

-Refer to the above table. If the consumer's equilibrium consists of 4 magazines and 4 books, then we know that

• A) the price of a magazine is 5 times more than the price of a book.
• B) the price of a magazine is 6 times more than the price of a book.
• C) the price of a book is 5 times more than the price of a magazine.
• D) the price of a book is 3 times more than the price of a magazine.

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Definitions:

Budget Lines

A graphical representation of all possible combinations of two goods that can be purchased with a fixed income.

Indifference Curves

Graphical representations of a consumer's preferences, showing different combinations of two goods between which the consumer is indifferent.

VCR

A video cassette recorder, a device once commonly used to play and record television programs and movies on magnetic tape.

Perfect Substitutes

Goods or services that can be used in exactly the same way, thus one can completely replace another in consumption.