Which of the following is correct about a consumer's optimization problem:
A)In order for a consumer to not be optimizing at a corner solution, it is necessary for us to assume that all goods are essential.
B)In order for a consumer to not be optimizing at a corner solution, it is sufficient for us to assume that all goods are essential.
C)In order for a consumer to not be optimizing at a corner solution, it is necessary and sufficient for us to assume that all goods are essential.
D)None of the above.

Question

Quizplus · Accepted Answer

In order for a consumer to not be optimizing at a corner solution, it is sufficient for us to assume that all goods are essential. This is because if all goods are essential, then the consumer will always want to consume some of each good, and will never want to consume zero of any good. This means that the consumer will always be on the interior of the budget constraint, and will never be at a corner solution.

Which of the Following Is Correct About a Consumer's Optimization