-In the above figure, which of the following statements is TRUE? I. The consumer maximizes utility by consuming at point A.
II) The marginal rate of substitution at point B and point A are equal because they are on the same budget line.
A) only I
B) only II
C) both I and II
D) neither I nor II

Question

-In the above figure, which of the following statements is TRUE? I. The consumer maximizes utility by consuming at point A.
II) The marginal rate of substitution at point B and point A are equal because they are on the same budget line.
A) only I 
B) only II 
C) both I and II 
D) neither I nor II

Quizplus · Accepted Answer

I. The consumer maximizes utility by consuming at point A. is true because the consumer is on the highest indifference curve that is tangent to the budget line.II) The marginal rate of substitution at point B and point A are equal because they are on the same budget line. is false because the marginal rate of substitution is the slope of the indifference curve, and the indifference curves are not parallel.

-In the Above Figure, Which of the Following Statements Is