-Assume That Jack Has the Preferences Shown in the Above

question 116

Multiple Choice

-Assume that Jack has the preferences shown in the above table. Also assume that the price of a can of Pepsi is $3.00 and that the price of a slice of pizza is $1.00. If he has $16 available to spend, what combination of Pepsi and pizza will be his consumer optimum?

• A) 4 cans of Pepsi, 1 slice of pizza
• B) 3 cans of Pepsi, 2 slices of pizza
• C) 2 cans of Pepsi, 4 slices of pizza
• D) 4 cans of Pepsi, 4 slices of pizza

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Definitions:

Stock Splits

A corporate action in which a company divides its existing stock into multiple shares to increase the liquidity of the shares, though the market capitalization remains the same.

Shareholder's Wealth

Shareholder's Wealth is the sum total of the capital value of a company's shares plus any retained earnings or losses. It represents the shareholders' stake in the company.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the overall value of one's holdings remains the same.

Shareholder's Wealth

The overall value that shareholders earn from their investment in a company, including dividends received and capital gains from share price appreciation.