-In the above figure, which of the following statements is true?
I. The consumer maximises utility by consuming at point A.
II. The marginal rate of substitution at point B and point A are equal because they are on the same budget line.
A) Only I
B) Only II
C) Both I and II
D) Neither I nor II

Question

-In the above figure, which of the following statements is true?
I. The consumer maximises utility by consuming at point A.
II. The marginal rate of substitution at point B and point A are equal because they are on the same budget line.
A) Only I 
B) Only II 
C) Both I and II 
D) Neither I nor II

Quizplus · Accepted Answer

I. The consumer maximises utility by consuming at point A. This is true because point A is on the highest indifference curve that the consumer can reach given their budget constraint.II. The marginal rate of substitution at point B and point A are equal because they are on the same budget line. This is not true because the marginal rate of substitution is the slope of the indifference curve, and the indifference curves are not parallel.

-In the Above Figure, Which of the Following Statements Is