Figure 3.3
-Refer to the indifference curve in Figure 3.3. Which of the following statements about marginal utility (MU) is correct?
A) MU(A) = 0.
B) MU(B) = 0.
C) MU(A) is negative.
D) MU(
B) is negative.

Question

Figure 3.3
-Refer to the indifference curve in Figure 3.3. Which of the following statements about marginal utility (MU) is correct?
A) MU(A) = 0.
B) MU(B) = 0.
C) MU(A) is negative. 
D) MU(
B) is negative.

Quizplus · Accepted Answer

At point B, the indifference curve is tangent to the budget constraint, indicating that the consumer is maximizing utility. Therefore, the marginal utility of the last unit consumed of both goods is equal and opposite to their respective prices. MU(B) = 0 because this is the point of maximum utility.

Figure 3.3 -Refer to the Indifference Curve in Figure 3.3. Which of Which