The figure given below represents two indifference curves I₁ and I₂ of an individual. Figure 6.2 Refer to Figure 6.2.At which point in the figure above will the consumer maximize satisfaction?

Question

Quizplus · Accepted Answer

The point where the indifference curve I₁ is tangent to the budget constraint line represents the consumer's optimal choice. This point has been labeled as point C in the figure. At this point, the consumer is able to maximize satisfaction given their budget constraint. Points A and B are on lower indifference curves and therefore represent lower levels of satisfaction. Points D and E are outside the budget constraint line and are not feasible choices for the consumer.

The Figure Given Below Represents Two Indifference Curves I1 and I2

The Figure Given Below Represents Two Indifference Curves I₁ and I₂