Use the following to answer question:
Figure 4.16
-(Figure 4.16) To maximize utility, this consumer will buy _____ hockey tickets and _____ soccer tickets.
A) 5; 3
B) 3; 5
C) 8; 0
D) 0; 8

Question

Use the following to answer question:
Figure 4.16 
-(Figure 4.16) To maximize utility, this consumer will buy _____ hockey tickets and _____ soccer tickets.
A) 5; 3 
B) 3; 5 
C) 8; 0 
D) 0; 8

Quizplus · Accepted Answer

The consumer will buy 5 hockey tickets and 3 soccer tickets because at that point, the budget line is tangent to the highest possible indifference curve (IC3). This is the point where the consumer's marginal rate of substitution (MRS) (the slope of the indifference curve) equals the price ratio of hockey tickets to soccer tickets. Any other combination of hockey and soccer tickets would result in a lower level of utility.

Use the Following to Answer Question