Figure 21-20 The Following Graph Illustrates a Representative Consumer's Preferences for Marshmallows

question 510

Multiple Choice

Figure 21-20
The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies:
-Refer to Figure 21-20. Assume that the consumer has an income of $40, the price of a bag of marshmallows is $2, and the price of a bag of chocolate chips is $2. The optimizing consumer will choose to purchase which bundle of marshmallows and chocolate chips?

• A)A
• B)B
• C)C

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Definitions:

Foreclosure action

A legal process in which a lender seeks to recover the balance of a loan from a borrower who has stopped making payments, typically by selling the property used as collateral.

Purchase price

The price at which an item or property is bought.

Conditional sale contract

A sales agreement that transfers ownership of an item to the buyer only after specific conditions are met, usually full payment of the purchase price.

Compounded monthly

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, done on a monthly basis.