If all consumers satisfy economists' assumptions regarding utility,then
A)they will each choose a consumption bundle that is inside the budget line
B)everyone will choose the same consumption bundle
C)everyone will have the same budget line
D)all consumers will react in the same way to a price change
E)each person will choose a consumption bundle on his or her budget line

Question

Quizplus · Accepted Answer

If all consumers satisfy economists' assumptions regarding utility, then they will maximize their utility subject to their budget constraint by choosing a consumption bundle on their budget line. Since each person will have their own income and preferences, each person's budget line and optimal consumption bundle will be different. Therefore, the best choice is E - each person will choose a consumption bundle on his or her budget line.

If All Consumers Satisfy Economists' Assumptions Regarding Utility,then