Figure: The Optimal Consumption Bundle (Figure: The Optimal Consumption Bundle) Look at the figure The Optimal Consumption Bundle.In the figure, which of the following could lead to an optimal consumption bundle on indifference curve I3?
A)a decrease in income
B)an increase in the price of restaurant meals
C)a decrease in the price of rooms
D)an increase in the price of rooms

Question

Figure: The Optimal Consumption Bundle  (Figure: The Optimal Consumption Bundle) Look at the figure The Optimal Consumption Bundle.In the figure, which of the following could lead to an optimal consumption bundle on indifference curve I3?
A)a decrease in income 
B)an increase in the price of restaurant meals 
C)a decrease in the price of rooms 
D)an increase in the price of rooms

Quizplus · Accepted Answer

Since the optimal consumption bundle is on indifference curve I3, the consumer prefers a higher level of rooms and a lower level of restaurant meals. Therefore, a decrease in the price of rooms (option C) would increase the quantity demanded of rooms and may lead to an optimal consumption bundle on indifference curve I3. Options A, B, and D are not likely to lead to an optimal consumption bundle on indifference curve I3.

Figure: the Optimal Consumption Bundle (Figure: the Optimal Consumption