When the Prices Were ($5, $1), Vanessa Chose the Bundle

question 58

Multiple Choice

When the prices were ($5, $1) , Vanessa chose the bundle (x, y) = (6, 3) .Now at the new prices, (p_x, p_y) , she chooses the bundle (x, y) = (5, 7) .For Vanessa's behavior to be consistent with the weak axiom of revealed preference, it must be that

• A)4p_y < p_x.
• B)p_x < 4p_y.
• C)5p_y < p_x.
• D)p_y = 5p_x.
• E)None of the above.

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Definitions:

Current Ratio

A financial ratio indicating the capacity of a firm to cover its short-term liabilities with its current assets.

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Assets a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid.

Coupon Rate

The annual interest rate paid by a bond expressed as a percentage of the face value.

Market Rate

The current interest rate offered in the market for securities or loans.