Figure 10-4
-Refer to Figure 10-4.The consumer can afford consumption bundles
A) r, s, t and u.
B) r, s, v and u.
C) s, v and u only.
D) s, v, t and u.

Question

Figure 10-4 
-Refer to Figure 10-4.The consumer can afford consumption bundles
A) r, s, t and u. 
B) r, s, v and u. 
C) s, v and u only. 
D) s, v, t and u.

Quizplus · Accepted Answer

The best choice for the consumer is bundle u, which maximizes utility given the budget constraint. This bundle includes both good X and good Y, with 3 units of X and 2 units of Y. The consumer could also choose bundle t, which includes only good X but at a higher quantity (4 units) than in bundle u. However, bundle u provides a higher level of utility for the consumer given the combination of both goods X and Y. Therefore, the consumer can afford bundles s, v, t, and u, but D is the best choice.

Figure 10-4 -Refer to Figure 10-4.The Consumer Can Afford Consumption Bundles