In an indifference curve/budget line diagram,a consumer's equilibrium consumption combination will occur
A) always inside the budget line.
B) always outside the budget line.
C) always on the budget line.
D) sometimes on and sometimes inside the budget line, depending on the indifference curves.
E) at the origin.

Question

Quizplus · Accepted Answer

The consumer's equilibrium consumption combination occurs where an indifference curve is tangent to the budget line, indicating the highest level of satisfaction the consumer can achieve given their budget constraints. This point is always on the budget line, not inside or outside of it.

In an Indifference Curve/budget Line Diagram,a Consumer's Equilibrium Consumption Combination