Consumer equilibrium on an indifference map is at:
A)any intersection of the budget line and an indifference curve.
B)any point on the highest indifference curve shown on the indifference map.
C)that point where the budget line is tangent to an indifference curve.
D)any point inside the budget line.
E)any point on the budget line.

Question

Quizplus · Accepted Answer

Consumer equilibrium occurs when the consumer chooses the bundle of goods that maximizes their utility while staying within their budget constraint. This occurs where the budget line is tangent to an indifference curve, meaning that the consumer cannot increase their utility by changing their bundle while staying within their budget constraint. Therefore, the correct choice is C.

Consumer Equilibrium on an Indifference Map Is At