An Optimizing Consumer Will Select a Consumption Bundle in Which

question 349

Multiple Choice

An optimizing consumer will select a consumption bundle in which

• A)income is maximized, and prices are minimized.
• B)utility is maximized, and prices are minimized.
• C)utility is maximized, subject to budget constraints.
• D)utility is maximized, and indifference curves are linear.

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Definitions:

Income Effect

Adjustments in the financial earnings of an individual or an economy and the corresponding effect on the quantity of goods or services demanded.

Indifference Curve

A graph showing different combinations of two goods that give a consumer equal satisfaction and utility.

Utility Level

A measure of the satisfaction or happiness that individuals get from the consumption of goods and services.

Indifference Curve

A graph depicting combinations of goods that give the consumer equal satisfaction and utility.