Assume that a combination of two goods reflects a point of tangency between the budget line and an indifference curve. In this situation, which of the following is INCORRECT?
A) Consumer equilibrium has been achieved.
B) All available income has been spent.
C) Utility can be increased by consuming less of both goods.
D) The optimal consumption bundle has been reached.

Question

Quizplus · Accepted Answer

At the point of tangency between the budget line and an indifference curve, the consumer is maximizing their utility given their budget constraint, meaning they cannot increase utility by consuming less of both goods.

Assume That a Combination of Two Goods Reflects a Point