The figure given below represents two indifference curves I 1 and I 2 of an individual. Figure 6.2
- Refer to Figure 6.2.At which point in the figure above will the consumer maximize satisfaction?
A)A
B)B
C)C
D)D

Question

The figure given below represents two indifference curves I 1 and I 2 of an individual. Figure 6.2 
- Refer to Figure 6.2.At which point in the figure above will the consumer maximize satisfaction?
A)A 
B)B 
C)C 
D)D

Quizplus · Accepted Answer

The consumer will maximize satisfaction at the point where the budget line is tangent to the highest attainable indifference curve. This point is labeled as point C in the figure. At point C, the consumer is spending their entire budget and is consuming a bundle of goods that is on the highest attainable indifference curve. Any point to the left of C is unaffordable given the budget constraint, and any point to the right of C would result in lower utility since it is on a lower indifference curve.

The Figure Given Below Represents Two Indifference Curves I1 and I2

The Figure Given Below Represents Two Indifference Curves I₁ and I₂