Figure: Consumer Equilibrium I The figure shows three of Owen's indifference curves for pizza and soda per week.Owen has $180 per month to spend on the two goods, and the price of a pizza is $20 and the price of a soda is
$1)50. (Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I.What is Owen's optimal consumption bundle?
A)4 pizzas and 150 sodas
B)8 pizzas and 40 sodas
C)6 pizzas and 40 sodas
D)14 pizzas and 20 sodas

Question

Figure: Consumer Equilibrium I The figure shows three of Owen's indifference curves for pizza and soda per week.Owen has $180 per month to spend on the two goods, and the price of a pizza is $20 and the price of a soda is
$1)50.   (Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I.What is Owen's optimal consumption bundle?
A)4 pizzas and 150 sodas 
B)8 pizzas and 40 sodas 
C)6 pizzas and 40 sodas 
D)14 pizzas and 20 sodas

Quizplus · Accepted Answer

Owen's optimal consumption bundle is where the highest attainable indifference curve is tangent to the budget line. In this case, that occurs at point P, where Owen consumes 6 pizzas and 40 sodas per week. This is the best choice because it maximizes Owen's utility given his budget constraint.

Figure: Consumer Equilibrium I the Figure Shows Three of Owen's