Return to the Ready-To-Eat Cereal Example from the Previous Question

question 22

Multiple Choice

Return to the ready-to-eat cereal example from the previous question. Now assume that there is only one kind of cereal,so the manufacturer cannot distinguish between types of consumer (adults vs.children,of which suppose there are equal numbers in the market) . What is the optimal menu of cereal boxes?

• A)a 3 ounce box (which adults will buy) sold for 48 cents; a 4 ounce box (which children will buy) sold for $1.12.
• B)a 3 ounce box (which adults will buy) sold for 48 cents; a 4 ounce box (which children will buy) sold for 64 cents.
• C)a 2 ounce box (which adults will buy) sold for 36 cents; a 4 ounce box (which children will buy) sold for 76 cents.
• D)No menu; the manufacturer is better off just selling a 5 ounce box for $1.12,which is only purchased by children.

---

Definitions:

Federal Income Taxes

Taxes levied by the United States federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Social Security Taxes

Taxes collected by the government from employees and employers to fund the Social Security program, which provides retirement, disability, and survivorship benefits.