Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve.
-Refer to Figure 21-24. About what percentage of his income is Steve spending on apples when he is at his optimum?
A)33.3 percent
B)38.2 percent
C)44.4 percent
D)56.7 percent

Question

Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. 
-Refer to Figure 21-24. About what percentage of his income is Steve spending on apples when he is at his optimum?
A)33.3 percent 
B)38.2 percent 
C)44.4 percent 
D)56.7 percent

Quizplus · Accepted Answer

Steve's optimal consumption bundle is at point E where his budget constraint is tangent to the highest attainable indifference curve. At point E, he is consuming 4 units of apples and 2 units of bananas, which costs him $12. Therefore, he is spending 4/12 or 33.3% of his income on apples.

Figure 21-24 the Figure Shows Three Indifference Curves and a Budget