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Figure: Harold's Indifference Curves
The figure shows three of Harold's indifference curves for bread and cheese.
-(Figure: Harold's Indifference Curves) Look at the figure Harold's Indifference Curves. If the price of bread is $0.50 per loaf, the price of cheese is $1 per pound, and Harold has $7 to spend on bread and cheese, Harold's optimal consumption bundle is _____ loaves of bread and _____ pounds of cheese.
A) 6; 4
B) 4; 3
C) 3; 2
D) 2; 8

Question

Use the following to answer questions:
Figure: Harold's Indifference Curves
The figure shows three of Harold's indifference curves for bread and cheese. 
-(Figure: Harold's Indifference Curves) Look at the figure Harold's Indifference Curves. If the price of bread is $0.50 per loaf, the price of cheese is $1 per pound, and Harold has $7 to spend on bread and cheese, Harold's optimal consumption bundle is _____ loaves of bread and _____ pounds of cheese.
A) 6; 4 
B) 4; 3 
C) 3; 2 
D) 2; 8

Quizplus · Accepted Answer

Harold's optimal consumption bundle is 6 loaves of bread and 4 pounds of cheese. This is because at this point, Harold's indifference curve is tangent to the budget line, indicating that he is getting the most satisfaction from his consumption of bread and cheese given his budget constraint.

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