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A consumer has Rs.100 to spend on ice cream priced at Rs.20 and chocolate priced at Rs.10. If he buys 3 ice creams, the number of chocolates he can buy spending the whole income is:
A2
B4
C6
D8
Answer & Solution
Correct answer: B. 4
1. Spending on ice cream = $3 \times 20 = Rs.60$.
2. Income left for chocolate = $100 - 60 = Rs.40$, and at Rs.10 each this buys $40 / 10 = 4$ chocolates.
3. 2, 6 and 8 use the wrong residual income, so those options are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.19_
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