Use the following to answer question:
-(Figure: Consumer Equilibrium III) Use Figure Consumer Equilibrium III.Kurt would maximize his utility at point _____ with the consumption of _____.

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Use the following to answer question:

-(Figure: Consumer Equilibrium III) Use Figure Consumer Equilibrium III.Kurt would maximize his utility at point _____ with the consumption of _____.

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Kurt would maximize his utility at point E where the budget constraint is tangent to the highest possible indifference curve. At this point, he consumes Q₂ of good X and Q₅ of good Y, which is the combination that gives him the most satisfaction given his budget constraint. Choice A is incorrect because point B lies below the highest possible indifference curve and would not provide Kurt with the most satisfaction. Choice B is incorrect because point E is the correct point, but the consumption levels given (Q₁ and Q₇) do not correspond to the budget constraint at that point. Choice C is incorrect because point F is to the left of the highest possible indifference curve and would not provide Kurt with the most satisfaction.

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