The point on the budget line that reaches the greatest level of utility is that point where
A)the difference between the slope of the budget line and the slope of an indifference curve is greatest.
B)the budget line touches the horizontal axis.
C)the slope of the budget line equals the slope of an indifference curve.
D)the budget line touches the vertical axis.
E)an indifference curve is beyond the budget line.

Question

Quizplus · Accepted Answer

The point on the budget line that reaches the greatest level of utility is where the slope of the budget line equals the slope of an indifference curve, indicating the consumer is optimizing their utility given their budget constraints. This is known as the point of tangency.

The Point on the Budget Line That Reaches the Greatest