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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 K. Given the budget constraint FL, utility:
A) can be increased by consuming more nights in a hotel room and fewer train tickets.
B) can be increased by consuming fewer nights in a hotel room and more train tickets.
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 K. Given the budget constraint FL, utility:
A) can be increased by consuming more nights in a hotel room and fewer train tickets. 
B) can be increased by consuming fewer nights in a hotel room and more train tickets. 
C) can be increased by consuming more of both goods. 
D) cannot be increased.

Quizplus · Accepted Answer

Point K is not on the budget line FL, indicating that the consumer is not maximizing utility. By moving to a point on the budget line, such as consuming more nights in a hotel room and fewer train tickets, the consumer can increase utility.

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