The optimal consumption bundle is the point representing a consumption-leisure pair that is on the
A)lowest possible indifference curve and is on or inside the consumer's budget constraint.
B)lowest possible indifference curve that maximizes total utility.
C)highest possible indifference curve and is on or inside the consumer's budget constraint.
D)highest possible indifference curve and is on or outside the consumer's budget constraint.
E)lowest possible indifference curve and is on or outside the consumer's budget constraint.

Question

Quizplus · Accepted Answer

The optimal consumption bundle is the point where the consumer can maximize their utility. This occurs at the highest possible indifference curve that is still affordable, which is represented by being on or inside the consumer's budget constraint. Therefore, the correct answer is C, the highest possible indifference curve and is on or inside the consumer's budget constraint.

The Optimal Consumption Bundle Is the Point Representing a Consumption-Leisure