Exhibit 6A-3 Consumer equilibrium

-Given the budget line and indifference curves shown in Exhibit 6A-3, assume the consumer is initially at point Y. To maximize total utility, the consumer should:

Question

Exhibit 6A-3 Consumer equilibrium
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-Given the budget line and indifference curves shown in Exhibit 6A-3, assume the consumer is initially at point Y. To maximize total utility, the consumer should:

Quizplus · Accepted Answer

The consumer should purchase more of good X and less of good Y to maximize total utility. At point Y, the consumer is not on the highest indifference curve that is tangent to the budget line. By moving to a higher indifference curve, the consumer can increase total utility.

Exhibit 6A-3 Consumer Equilibrium