An individual consuming two goods, X and Y, has the usual downward-sloping, convex indifference curves. All EXCEPT one of the following will characterize the optimal consumption point. Which is the EXCEPTION?

Question

Quizplus · Accepted Answer

The optimal consumption point is characterized by the tangency between an indifference curve and the budget line, meaning the consumer is maximizing utility given their budget constraint. An intersection of an indifference curve and the budget line does not necessarily indicate optimal consumption, as it may not reflect the highest attainable utility.

An Individual Consuming Two Goods, X and Y, Has the Usual