The point where an indifference curve just touches the budget line at one point
A) is the best affordable point.
B) is where the marginal rate of substitution exceeds the relative price by as much as possible.
C) is a point on the consumer's supply of spending curve.
D) cannot be possible because indifference curves always cross the budget line at two points.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

The point where the indifference curve just touches the budget line at one point is the highest attainable level of utility. It is the best affordable point because it maximizes the utility that the consumer can achieve with their limited income.

The Point Where an Indifference Curve Just Touches the Budget