The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3

-In Figure 7.3, the consumer is in equilibrium at point:
A)A
B)B
C)C
D)D

Question

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
 
-In Figure 7.3, the consumer is in equilibrium at point:
A)A 
B)B 
C)C 
D)D

Quizplus · Accepted Answer

The consumer is in equilibrium at the point where the budget constraint (the straight line) is tangent to the highest possible indifference curve (the curve furthest to the right). This occurs at point B, where the consumer chooses to consume 4 units of good X and 3 units of good Y. This combination gives the consumer the highest possible level of utility given their budget constraint.

The Below Figure Shows the Various Combinations of the Goods