budget constraint
When the indifference curve is tangent to the budget constraint,
| a. | indifference curves are likely to intersect. |
| b. | a consumer cannot be made better off without an increase in her income or a price decrease in one of the goods she consumes. |
| c. | the consumer is likely to be at a sub-optimal level of consumption. |
| d. | income is at its optimum for a consumer. |
Homework Answers
ANSWER - B
When the indifference curve is tangent to the budget constraint,
a consumer cannot be made better off without an increase in her income or a price decrease in one of the goods she consumes.
optimal consumption & budget constraint
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