Figure 5-13

- If a consumer is currently at Point E on Figure 5-13, she will

Question

Figure 5-13 
 
-​ If a consumer is currently at Point E on Figure 5-13, she will

Quizplus · Accepted Answer

If the consumer is currently at Point E, she is on a lower indifference curve than both Point C and Point D. Moving to either of these points would allow her to consume more of both goods while remaining on a higher indifference curve, making her better off. Reducing expenditures would not allow her to consume more of both goods and would not move her to a higher indifference curve. Staying at Point E would mean she is not maximizing her utility. Therefore, the best choice is to move to either Point C or Point D. Since Point D is closer to the budget constraints, choosing Point D is a more cost-effective option.

Figure 5-13 -​ If a Consumer Is Currently at Point E on Currently

Figure 5-13 - If a Consumer Is Currently at Point E on Currently