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Consumer equilibrium occurs where the budget line is _________ to the ___________ possible indifference curve.

A. Tangent; highest

B. Equal; lowest

C. Marginal; maximum

D. Differential; highest

 

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Prachi Dabas
Prachi DabasLv10
31 Oct 2020

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Related questions

20) When a consumer's marginal rate of substitution between X and Y is equal to the ratio of prices for X and Y, and when the consumer is spending all available income, then A) the budget line is tangent to an indifference curve. B) the consumer is not maximizing his utility. C) a higher indifference curve can be reached given the existing budget line. D) the budget line is tangent to the indifference curve at all quantities of X and Y. E) all budget lines are tangent to all indifference curves.

To maximize​ utility, consumers choose a consumption bundle:

A. where the slope of the budget constraint is equal to the ratio of the good price on the horizontal axis divided by the price of the good on the vert axis (multiplied by minus one).

B. on the highest indifference curve given the budget constraint.

C. where indifference curves intersect one another. 

D. where the marginal utility of each product is maximized. 

E. where the slope of the highest indifference curve is equal to the marginal rate of substitution

We assume that each consumer seeks the highest indifference curve possible.

The budget line gives the combinations of two goods that the consumer can purchase with a given budget.

List and briefly describe the two conditions that satisfy utility maximization when selecting a combination of two goods.

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