When Indifference Curve Analysis Is Used, a Consumer Optimum Occurs

question 116

Multiple Choice

When indifference curve analysis is used, a consumer optimum occurs at the point at which

• A) the indifference curves intersect.
• B) the indifference curve is tangent to the budget line.
• C) total utility is maximum.
• D) marginal utility/price ratio of all goods consumed is equal.

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Definitions:

Marginal Cost

The cost of producing one additional unit of a good or service, representing the increase in total cost from an increase in production by one unit.

Hats

Headwear pieces, varying in style and function, often used for fashion, protection, or ceremonial purposes.

Price Effect

The impact on consumer demand and market supply when the price of a good or service changes.

Total Revenue

The total amount of money generated by a firm from the sale of its goods or services.