Consumer equilibrium occurs at:
A) the point where the indifference curve crosses the budget line from below.
B) any point of intersection between an indifference curve and the budget line.
C) the midpoint of every indifference curve.
D) the point of tangency between an indifference curve and the budget line.

Question

Quizplus · Accepted Answer

Consumer equilibrium occurs at the point where the indifference curve is tangent to the budget line. At this point, the consumer is allocating their income in the most optimal way possible, given their preferences and budget constraints. Therefore, the correct answer is D.

Consumer Equilibrium Occurs At