The below indifference map shows the various combinations of hours of music and apples that yield different levels of utility.Figure 7.1

-When the budget line for two goods is just tangent to the highest achievable indifference curve, then _____.
A)the consumer is in equilibrium
B)the consumer should purchase more of the good represented on the horizontal axis
C)the consumer should purchase more of the good represented on the vertical axis
D)the consumer cannot afford the combination represented by the tangency point
E)the consumer should purchase less of both goods

Question

The below indifference map shows the various combinations of hours of music and apples that yield different levels of utility.Figure 7.1
 
-When the budget line for two goods is just tangent to the highest achievable indifference curve, then _____.
A)​the consumer is in equilibrium 
B)​the consumer should purchase more of the good represented on the horizontal axis 
C)​the consumer should purchase more of the good represented on the vertical axis 
D)​the consumer cannot afford the combination represented by the tangency point 
E)​the consumer should purchase less of both goods

Quizplus · Accepted Answer

When the budget line is just tangent to the highest achievable indifference curve, it means that the consumer is getting the maximum total utility (or satisfaction) from the given budget. Therefore, the consumer is in equilibrium.

The Below Indifference Map Shows the Various Combinations of Hours