Which of the Following Is TRUE When a Consumer Is

question 8

Multiple Choice

Which of the following is TRUE when a consumer is maximizing her utility?

• A) She consumes where the budget constraint intersects the midpoint of her indifference curve.
• B) She consumes halfway between the two intersections of her budget constraint and indifference curve.
• C) She consumes at the point at which the slope of her indifference curve is zero.
• D) She consumes at the point at which her budget constraint is tangent to her indifference curve.

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Definitions:

Per-Unit Subsidy

A financial incentive given by the government, reducing the cost of each unit of a good or service to either the producer or consumer.

Profit Maximization

A business objective to achieve the highest possible profit from operations, often by adjusting production, prices, and other variables.

Competitive Industry

An industry structure where many firms compete for market share, with no single company dominating the market.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that consumers are willing to buy.