A Consumer Will Achieve the Highest Level of Utility Possible

question 166

Multiple Choice

A consumer will achieve the highest level of utility possible when she consumes

• A) at the point at which the highest indifference curve is tangent to the budget constraint.
• B) at the point at which the indifference curve crosses the budget constraint.
• C) at a point to the left of the budget constraint.
• D) just below the point where the indifference curve crosses the budget constraint.

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Definitions:

Units

Basic quantities or measures adopted to quantify and represent variables in quantitative analyses, such as units of measurement in physics or economic units in economics.

Profit-Maximizing

The process or strategy by which a firm determines the price and output level that returns the greatest profit.

Loss-Minimizing

A strategy aimed at reducing the negative impact or minimizing the losses in a business operation or an investment.

Quantity

The amount or number of a material or immaterial good or service.