A Consumer Has Preferences Over Two Goods: Pizza and Beer

question 151

Multiple Choice

A consumer has preferences over two goods: pizza and beer.The four bundles shown in the table below lie on the same indifference curve for the consumer.

Which of the following statements regarding these bundles is correct?

• A) The goods are perfect substitutes for this consumer.
• B) The goods are perfect complements for this consumer.
• C) These bundles violate the property that indifference curves are bowed inward.
• D) These bundles violate the property that indifference curves do not cross.

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Definitions:

Closing Entry

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, ultimately resetting the balances of temporary accounts to zero.

Income Summary

An account used in the closing process that summarizes the results of operations by collecting all revenue and expense account balances before determining the net income or loss.

Retained Earnings

The cumulative amount of profits that have been reinvested in the business rather than distributed to shareholders as dividends.

Dividends

Dividends disbursed to members holding shares in a corporation, generally originating from the profits of the business.