When the Indifference Curve Is Tangent to the Budget Constraint

question 158

Multiple Choice

When the indifference curve is tangent to the budget constraint,

• A)a consumer cannot be made better off without an increase in her income or a price decrease in one of the goods she consumes.
• B)the consumer is likely to be at a sub-optimal level of consumption.
• C)income is at its optimum for a consumer.
• D)indifference curves are likely to intersect.

---

Definitions:

Variables

Elements, factors, or quantities that can change or have different values in a given situation or analysis.

Economic Decisions

The choices made by individuals, households, or organizations regarding the allocation of resources and the distribution of goods and services.

Purposeful

Refers to actions undertaken with a specific goal or intention in mind.

Spontaneous

Occurring without external cause or premeditation, often resulting from a natural inclination or impulse.