If the combination of two goods is a point of tangency between the budget line and an indifference curve, then:
A) consumer equilibrium has been achieved.
B) some available income has not been spent.
C) utility can be decreased by consuming more of both goods.
D) utility can be increased by consuming more of one good and less of the other.

Question

Quizplus · Accepted Answer

Consumer equilibrium occurs when the budget line and indifference curve are tangent to each other, meaning that the consumer is maximizing their utility with the given budget constraint. Therefore, if the combination of two goods is a point of tangency, consumer equilibrium has been achieved.

If the Combination of Two Goods Is a Point of Tangency