At the consumer's optimum
A)the budget constraint would have a slope of MUₓ/Pₓ.
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 center point.
D)the slope of the indifference curve is equal to the slope of the budget constraint.

Question

Quizplus · Accepted Answer

At the consumer's optimum, the slope of the indifference curve is equal to the slope of the budget constraint. This ensures that the consumer is consuming the combination of goods that gives him the highest possible utility, given his budget constraint. A and B are incorrect because the slope of the budget constraint would be MUx/Py, not MUx/Px, and it is not always possible to increase consumption of both goods at the consumer's optimum. C is incorrect because the indifference curve does not necessarily intersect the budget constraint at its center point.

At the Consumer's Optimum