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Figure: Consumer Equilibrium IV
-(Figure: Consumer Equilibrium IV) Look at the figure Consumer Equilibrium IV. Assume that you are consuming the combination of goods at point G. Given the budget constraint FL, utility:
A) can be increased by consuming more train tickets and fewer nights in a hotel room.
B) can be increased by consuming fewer train tickets and more nights in a hotel room.
C) can be increased by consuming more of both goods.
D) cannot be increased.

Question

Use the following to answer questions:
Figure: Consumer Equilibrium IV 
-(Figure: Consumer Equilibrium IV) Look at the figure Consumer Equilibrium IV. Assume that you are consuming the combination of goods at point G. Given the budget constraint FL, utility:
A) can be increased by consuming more train tickets and fewer nights in a hotel room. 
B) can be increased by consuming fewer train tickets and more nights in a hotel room. 
C) can be increased by consuming more of both goods. 
D) cannot be increased.

Quizplus · Accepted Answer

At point G, the consumer is not on the highest attainable indifference curve. By consuming more train tickets and fewer nights in a hotel room, the consumer can move to a higher indifference curve and increase utility.

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