When the Budget Line Is Just Tangent to the Highest

question 131

Multiple Choice

When the budget line is just tangent to the highest achievable indifference curve,then _____.

• A)the consumer is in equilibrium
• B)the consumer should purchase more of good X
• C)the consumer should purchase more of good Y
• D)the consumer cannot afford the combination represented by the tangency point
• E)the consumer should purchase less of both goods

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Definitions:

Stock Dividends Distributable

It represents the shares that are due to shareholders as a dividend but have not yet been distributed.

Retained Earnings

The accumulated portion of net income that a company decides to keep, rather than distributing among shareholders as dividends, to finance investment or pay off debt.

Common Shares

Equity securities representing ownership interests in a corporation, providing voting rights and entitling shareholders to a share of the company's profits via dividends.

Share Capital

The total amount of funds raised by a company through the issuance of shares to shareholders, representing ownership in the company.