An optimal choice in which a consumer does not consume all types of goods
A) is a corner solution.
B) cannot be an equilibrium.
C) cannot exhaust the budget constraint.
D) is an interior solution.

Question

Quizplus · Accepted Answer

An optimal choice in which a consumer does not consume all types of goods is a corner solution, where the consumer chooses to consume only one or a few goods to maximize their utility. This occurs when the budget constraint is tangent to an indifference curve at one of its endpoints. Therefore, the consumer is consuming the maximum amount of a good that their budget allows while not consuming any of the other goods.

An Optimal Choice in Which a Consumer Does Not Consume