When a consumer is in equilibrium this means that he or she is:
A)consuming the largest market basket possible.
B)consuming the best market basket,given his or her preferences,income,and prices.
C)maximizing his or her income.
D)consuming goods with the highest total utility.

Question

Quizplus · Accepted Answer

When a consumer is in equilibrium, he or she is consuming the best market basket, given his or her preferences, income, and prices. This means that the consumer is getting the most satisfaction possible from the goods and services he or she can afford. Option A is incorrect, because the consumer may not necessarily be consuming the largest market basket possible, but rather the one that maximizes utility. Option C is incorrect, because there is no reason to believe that the consumer is maximizing his or her income - this is a separate issue from consumption. Option D is incorrect, because the consumer may not necessarily be consuming goods with the highest total utility, but rather the goods that provide the most utility per unit of money spent.

When a Consumer Is in Equilibrium This Means That He