Refer to the diagram, where xy is the relevant budget line and I₁, I₂, and I₃are indifference curves. If the consumer is initially at point L, he or she should A) strive for point N by obtaining a larger money income. B) purchase more of X and less of Y. C) remain at that point to maximize utility. D) purchase more of Y and less of X.

Question

Quizplus · Accepted Answer

Point L is on a lower indifference curve compared to IS1U1B12S1U1B0, indicating that the consumer is not maximizing their utility. To increase their satisfaction, the consumer should move to a higher indifference curve. This can be achieved by consuming more Y and less X, which can be done by moving from point L towards point S1U1B1 on the same budget line. Therefore, option D is the best choice.

Refer to the Diagram, Where Xy Is the Relevant Budget