An interior solution to a consumer's utility maximization problem implies
A)consuming a positive amount of one good and a negative amount of the other good.
B)consuming negative amounts of all goods.
C)consuming optimal amounts of all goods.
D)consuming less than an optimal amount of at least one good.

Question

Quizplus · Accepted Answer

An interior solution means that the consumer is consuming a positive amount of both goods, which is necessary to achieve utility maximization. Option A and B are not possible as negative consumption is not a feasible option. Option D is incorrect because optimal consumption of all goods is achieved in an interior solution.

An Interior Solution to a Consumer's Utility Maximization Problem Implies