Use the following to answer questions:
Figure: Labor Supply and Welfare
-(Figure: Labor Supply and Welfare) Refer to the figure. The budget constraint is:
A) ABC.
B) BD.
C) ABDC.
D) ABD.

Question

Use the following to answer questions:
Figure: Labor Supply and Welfare 
-(Figure: Labor Supply and Welfare) Refer to the figure. The budget constraint is:
A) ABC. 
B) BD. 
C) ABDC. 
D) ABD.

Quizplus · Accepted Answer

Point D represents the optimal choice. At point D, the consumer is maximizing their utility given the budget constraint, which is where the indifference curve is tangent to the budget constraint. It represents the amount of labor supply that maximizes the consumer's welfare.

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