Assume a diagram in which a budget line is imposed on an indifference map. A consumer will maximize her utility
A)at any point where the budget line and an indifference curve intersect.
B)at either point where the budget line intersects the horizontal and vertical axes.
C)where the budget line is tangent to an indifference curve.
D)where the ratio of the two product prices equals the reciprocal of the consumer's income.

Question

Quizplus · Accepted Answer

The consumer maximizes utility where the budget line is tangent to an indifference curve, indicating the optimal combination of goods that can be purchased with a given budget, balancing marginal rates of substitution and price ratios.

Assume a Diagram in Which a Budget Line Is Imposed