If an Indifference Curve Intersects the Budget Constraint at Two

question 68

Multiple Choice

If an indifference curve intersects the budget constraint at two points,then ________.

• A)the consumer would be equally happy at either of those two points
• B)optimal consumption is found by moving to a lower indifference curve
• C)optimal consumption is found by moving to a lower budget constraint
• D)the consumer will choose the point that minimizes consumption expenditure

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Definitions:

Decision-making Model

A conceptual framework that outlines the process of making choices by identifying options, evaluating them, and selecting a course of action.

Complete Rationality

The assumption that we take into account every single criterion or possible alternative to make a decision.

Bounded Rationality

The idea that we are restricted by a variety of constraints when making decisions.

Bounded Rationality

A concept that decision-makers are limited by the information they have, their cognitive limitations, and the finite amount of time they have to make a decision.