The point where the budget constraint and an indifference curve are tangent
A)Represents maximum total revenue.
B)Indicates the optimal level of production.
C)Represents the optimal consumption point.
D)Indicates profit maximization.

Question

Quizplus · Accepted Answer

The point where the budget constraint and an indifference curve are tangent represents the optimal consumption point, where the consumer is maximizing their utility subject to their budget constraint. Therefore, the correct choice is C. Options A, B, and D are incorrect because they relate to production and profit maximization, which are not relevant in this context.

The Point Where the Budget Constraint and an Indifference Curve