When a consumer is consuming at a point where his or her budget line is not as steep as his or her indifference curve, then he or she should
A) consume none of the good that is measured on the horizontal axis.
B) consume less of the good that is measured on the horizontal axis.
C) not change his or her behaviour.
D) consume more of the good that is measured on the horizontal axis.

Question

Quizplus · Accepted Answer

When the budget line is not as steep as the indifference curve, it means the marginal rate of substitution (MRS) of the good on the horizontal axis for the good on the vertical axis is higher than the price ratio. To reach an optimal consumption point where the budget line is tangent to the highest possible indifference curve, the consumer should consume more of the good on the horizontal axis, thus making the slopes equal.

When a Consumer Is Consuming at a Point Where His