Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A consumer chooses to buy more of good X and less of good Y while remaining on the same indifference curve.
B
A consumer allocates their budget in such a way that the marginal rate of substitution between goods X and Y equals the ratio of their prices.
C
A consumer prefers a combination of goods that lies outside their budget constraint to maximize utility.
D
A consumer selects a combination of goods that does not maximize their total utility but is easily accessible.
Understanding the Answer
Let's break down why this is correct
Answer
In consumer utility maximization, an optimal consumption bundle is where a person gets the most satisfaction from their spending. This happens at the point where an indifference curve, which shows different combinations of two goods that provide the same satisfaction, touches the budget line, representing what they can afford. For example, imagine someone choosing between apples and oranges. If they can buy 4 apples and 6 oranges, and this point touches the budget line while being on the highest indifference curve they can reach, then this combination is their optimal consumption bundle. At this point, they are maximizing their happiness with the limited money they have.
Detailed Explanation
This choice shows that a consumer is balancing what they want with what they can afford. Other options are incorrect because This option suggests changing the amounts of goods without considering prices; This choice implies wanting things that are too expensive.
Key Concepts
utility
indifference curve
optimal consumption bundle
Topic
Consumer Utility Maximization
Difficulty
hard level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.