At Prices (P₁, P₂)= ($4, $2), Ivan Buys the Bundle

question 51

Multiple Choice

At prices (p₁, p₂) = ($4, $2) , Ivan buys the bundle (x₁, x₂) = (8, 20) .At prices (p'₁, p'₂) = ($2, $4) , he buys the bundle (x'₁, x'₂) = (10, 13) .At prices (p''₁, p''₂) , he buys the bundle (x''₁, x''₂) = (14, 11) .If his preferences satisfy the strong axiom of revealed preferences, then it must be that

• A)8p₁ > 2p₂.
• B)6p''₁ < 9p''₂.
• C)6p''₁ <8p''₂.
• D)p''₁ = p''₂.
• E)None of the above.

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Definitions:

Cost of Goods Sold

This refers to the total cost of all the materials and labor directly involved in producing goods sold by a company during a specific period.

Purchased Inventory

Inventory items that are bought from suppliers and used in the production of goods or services.

Acid-test Ratio

A liquidity metric that measures a company's ability to pay off its current liabilities without relying on the sale of inventory.

Total Prepaid Expenses

Total prepaid expenses refer to the cumulative amount of expenses paid in advance for goods or services to be received in the future, recorded as assets on the balance sheet.