If a person consumes only two goods,which of the following is NOT necessary for a consumer to be at his or her best affordable point of consumption?
A) The consumer chooses a bundle of goods that lies on his or her budget line.
B) The consumer is on his or her highest attainable indifference curve.
C) The consumer chooses equal amounts of both goods.
D) The marginal rate of substitution between the two goods is equal to the relative price of those two goods.
E) The indifference curve is tangent to the budget line.

Question

Quizplus · Accepted Answer

The consumer does not necessarily need to choose equal amounts of both goods to be at their best affordable point. The best affordable point occurs where the indifference curve is tangent to the budget line, and the marginal rate of substitution between the two goods is equal to the relative price of those two goods. Therefore, options A, B, D, and E are all necessary for the consumer to be at their best affordable point of consumption.

If a Person Consumes Only Two Goods,which of the Following