Exhibit 20-6 -Refer to Exhibit 20-6. I₁, I₂ and I₃ are indifference curves and line ab is the relevant budget constraint. If the consumer is initially at point R, he should A)strive for point N by obtaining a larger money income. B)purchase more of X and less of Y. C)remain at that point in order to maximize utility. D)purchase more of Y and less of X. E)none of the above

Question

Quizplus · Accepted Answer

Given the consumer is initially at point R, moving towards point N (along the budget constraint line ab) would mean purchasing more of Y and less of X to reach a higher indifference curve (I₂), thus increasing utility.

Exhibit 20-6 ​

Exhibit 20-6