When a consumer is purchasing the best combination of two goods, X and Y, subject to a budget constraint, we say that the consumer is at an optimal choice point. A graph of an optimal choice point shows that it occurs
A)along the highest attainable indifference curve.
B)where the indifference curve is tangent to the budget constraint.
C)where the marginal utility per dollar spent is the same for both X and Y.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

An optimal choice point occurs where the highest attainable indifference curve is tangent to the budget constraint, and where the marginal utility per dollar spent is equal for both goods, satisfying all the conditions mentioned.

When a Consumer Is Purchasing the Best Combination of Two