Figure 21-25 The figure pertains to a particular consumer. On the axes, X represents the quantity of good X and Y represents the quantity of good Y.
-Refer to Figure 21-25. Suppose the price of good X is $8, the price of good Y is $10, and the consumer's income is $360. Then the consumer's optimal choice is to buy
A)15 units of good X and 24 units of good Y.
B)20 units of good X and 20 units of good Y.
C)30 units of good X and 12 units of good Y.
D)40 units of good X and 4 units of good Y.

Question

Figure 21-25 The figure pertains to a particular consumer. On the axes, X represents the quantity of good X and Y represents the quantity of good Y. 
-Refer to Figure 21-25. Suppose the price of good X is $8, the price of good Y is $10, and the consumer's income is $360. Then the consumer's optimal choice is to buy
A)15 units of good X and 24 units of good Y. 
B)20 units of good X and 20 units of good Y. 
C)30 units of good X and 12 units of good Y. 
D)40 units of good X and 4 units of good Y.

Quizplus · Accepted Answer

The consumer's optimal choice is determined by the highest level of utility they can attain given their budget constraint. At point A, the consumer can afford to buy 30 units of good X and 12 units of good Y given their income and the prices of each good. This combination of goods gives the consumer the highest level of utility, as it is on the highest possible indifference curve (IC3) that they can reach given their budget constraint. Any combination of goods below point A would result in a lower level of utility, and any combination of goods above point A would be unattainable given the consumer's budget constraint.

Figure 21-25 the Figure Pertains to a Particular Consumer