Boundary solutions arise when
A) A good provides a consumer with little value per dollar relative to other alternatives
B) A consumer has a very low level of income
C) Indifference curves are convex
D) Indifference curves exhibit increasing MRS

Question

Quizplus · Accepted Answer

Boundary solutions occur when a good provides a consumer with little value per dollar relative to other alternatives. In other words, the consumer reaches a point where they are indifferent between consuming more of the good and switching to a substitute good that provides more value for their money. This typically occurs at the boundary of the budget constraint, where the consumer has exhausted their budget and is forced to make decisions based on the relative value of goods.

Boundary Solutions Arise When