An optimizing consumer will select a consumption bundle in which
A)income is maximized, and prices are minimized.
B)utility is maximized, and prices are minimized.
C)utility is maximized, subject to budget constraints.
D)utility is maximized, and indifference curves are linear.

Question

Quizplus · Accepted Answer

An optimizing consumer will aim to maximize their utility subject to their budget constraints, as they cannot spend more than what they can afford. Therefore, the consumer will choose a consumption bundle in which their utility is maximized while considering the prices of the goods they want to purchase. The consumer does not aim to maximize their income nor do they necessarily choose a consumption bundle with linear indifference curves.

An Optimizing Consumer Will Select a Consumption Bundle in Which