At the optimum:
A)the slope of the indifference curve is equal to the slope of the budget constraint
B)it is still possible for the consumer to increase his consumption of both goods
C)the indifference curve would intersect the budget constraint at its centre
D)the budget constraint would have a slope of 1

Question

Quizplus · Accepted Answer

At the optimum, the consumer is maximizing utility subject to the budget constraint, which means that the slope of the indifference curve (representing the consumer's preferences) is equal to the slope of the budget constraint (representing the prices of the goods). This is because at the optimum, the consumer is allocating his/her money in such a way that the marginal utilities per dollar spent on each good are equal, which is reflected in the equal slopes of the curves. Therefore, choice A is correct.

At the Optimum