This Graph Shows Three Different Budget Constraints: A,B,and C

question 119

Multiple Choice

This graph shows three different budget constraints: A,B,and C.If Ted's budget constraint is shown by line A in the graph shown,and Ted's income for these two items is $36,what are the prices of the two goods?

• A)Soda costs $3 per case,and milk costs $4 a gallon.
• B)Soda costs $4 per case,and milk costs $3 a gallon.
• C)Soda costs $12 per case and milk costs $9 a gallon.
• D)Soda costs $6 per case and milk costs $3 a gallon.

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Definitions:

Reward-to-volatility Ratio

A ratio used to assess the return of an investment relative to its risk, calculated by dividing the excess return of an investment by its standard deviation.

Standard Deviation

A statistical measure of the dispersion of a set of data from its mean, often used to quantify the risk associated with a particular investment.

Treasury Bills

Short-term government securities issued at a discount from the face value and mature in one year or less, representing a secure, low-risk investment option.

Optimal Weights

The most efficient proportion of different assets in an investment portfolio, aiming to maximize returns and minimize risk.