If Goldie Chooses the Bundle (6, 6) When Prices Are

question 56

Multiple Choice

If Goldie chooses the bundle (6, 6) when prices are ($6, $2) and the bundle (10, 0) when prices are ($5, $5) , Aif(P2 > 4) ]

• A) the bundle (6, 6) is revealed preferred to (10, 0) but there is no evidence that she violates WARP.
• B) neither bundle is revealed preferred to the other.
• C) the bundle (10, 0) is revealed preferred to (6, 6) and she violates WARP.
• D) Goldie violates WARP.
• E) the bundle (10, 0) is revealed preferred to (6, 6) and there is no evidence that she violates WARP.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including material and labor costs.

Break-Even Point

The level of production or sales at which total revenues equal total expenses, resulting in no net profit or loss.

Contribution Margin Ratio

The ratio of contribution margin to sales revenue, indicating the percentage of each sales dollar available to cover fixed costs and provide profit.

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.