A Consumption Bundle Is Affordable as Long As

question 11

Multiple Choice

A consumption bundle is affordable as long as:

• A) it is a point that is on an indifference curve that is to the right of the budget line.
• B) it is a point that falls on the 45 degree line.
• C) the present discount value of the consumption stream is less than the present discount value of the income stream.
• D) the amount of the good consumed from year to year does not increase.

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Definitions:

Cash Expenses

Expenses that require an immediate outlay of cash during a given time period.

Beginning Cash Balance

The amount of cash a company has at the start of a new financial period, carried over from the end of the previous period.

Cost of Goods Sold

The expenses incurred that are directly related to the manufacturing of products a company sells, including labor and materials.

Inventory Purchases

The process of acquiring goods or raw materials that a business holds for the ultimate goal of resale or production.