A Consumer Allocates All Income Between Two Products, a and B

question 120

Multiple Choice

A consumer allocates all income between two products, A and B. If, on an indifference map, the equilibrium position shifts onto a higher indifference curve, then

• A) the consumer must be purchasing more of both products.
• B) the relative prices of A and B must have changed.
• C) the prices of A and B must have increased.
• D) total utility must have increased.

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Definitions:

Investment Potential

This refers to the likelihood or capacity for an investment to grow in value, offering returns to the investor.

Discounted Present Value

Discounted present value is a financial calculation that determines the current worth of a future sum of money or stream of cash flows, given a specified rate of return.

Financial Attribute

Characteristics or information pertaining to financial entities, transactions, or instruments that can be measured or identified, such as price, yield, risk, or returns.

Dividends

Payments made by a corporation to its shareholder members, usually derived from profits.