When a Consumer Is Purchasing the Best Combination of Two

question 151

Multiple Choice

When a consumer is purchasing the best combination of two goods, X and Y, subject to a budget constraint, we say that the consumer is at an optimal choice point. A graph of an optimal choice point shows that it occurs

• A)along the highest indifference curve.
• B)along the lowest budget constraint.
• C)where the indifference curve is tangent to the budget constraint.
• D)All of the above are correct.

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Definitions:

Expense Account

An account used to record the costs incurred by a business in the process of generating revenue, excluding direct materials and direct labor expenses.

Asset Account

An account on a company's balance sheet that represents the value of the assets owned.

Unearned Revenue

Unearned Revenue represents money received by a company for goods or services yet to be delivered or performed, considered a liability until the revenue is earned.

Liability Account

An accounting category used for recording debts or obligations that a company owes to others, typically excluding equity or ownership stakes.