Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question.Assume that the price of both goods X and Y are $1 each.Point D on the graph.
A)Is not affordable.
B)Is affordable but does not yield the highest utility possible.
C)Is affordable and is the optimal consumption bundle for this individual.
D)Lies on an indifference curve that is not obtainable.

Question

Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question.Assume that the price of both goods X and Y are $1 each.Point D on the graph. 
A)Is not affordable. 
B)Is affordable but does not yield the highest utility possible. 
C)Is affordable and is the optimal consumption bundle for this individual. 
D)Lies on an indifference curve that is not obtainable.

Quizplus · Accepted Answer

Point D is on a budget line that is tangent to an indifference curve, indicating that it is an affordable consumption bundle that yields a certain level of utility. However, it is not the optimal consumption bundle as there is another point (point E) that is on a higher indifference curve, indicating higher utility. Therefore, the best choice is B, which states that point D is affordable but does not yield the highest utility possible.

Use the Indifference Curves and the Budget Lines in Figure