-The above figure shows Sam's budget line and one of his indifference curves. What combination of coffee and gasoline will Sam select?
A) Combination a because that contains all the gasoline he needs and still has some coffee.
B) Combination c because that contains all the coffee he needs and some gasoline.
C) Combination b because it is on his budget line and on the highest attainable indifference curve.
D) None of the above

Question

-The above figure shows Sam's budget line and one of his indifference curves. What combination of coffee and gasoline will Sam select?
A) Combination a because that contains all the gasoline he needs and still has some coffee. 
B) Combination c because that contains all the coffee he needs and some gasoline. 
C) Combination b because it is on his budget line and on the highest attainable indifference curve. 
D) None of the above

Quizplus · Accepted Answer

Combination b is the optimal choice because it is where the budget line is tangent to the highest attainable indifference curve, indicating the best possible combination of coffee and gasoline that maximizes Sam's utility given his budget constraint.

-The Above Figure Shows Sam's Budget Line and One of His