At the consumer's optimum
A) the budget constraint will have a slope of MUx/Px.
B) it is still possible for the consumer to increase his consumption of both goods.
C) the indifference curve will intersect the budget constraint at the midpoint of the budget constraint.
D) the slope of the indifference curve is equal to the slope of the budget constraint.

Question

Quizplus · Accepted Answer

At the consumer's optimum, the slope of the indifference curve is equal to the slope of the budget constraint. This is because the consumer is allocating their budget in such a way that the marginal utility per dollar spent on each good is equal. This is also known as the equal marginal principle. Thus, choice D is the correct answer. Choices A, B, and C are incorrect because they do not accurately describe the consumer's behavior at the optimum.

At the Consumer's Optimum