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The consumer is in equilibrium at a point where the budget line :
  • a)
    is above an indifference curve.
  • b)
    is below an indifference curve.
  • c)
    is tangent to an indifference curve.
  • d)
    cuts an indifference curve.
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
The consumer is in equilibrium at a point where the budget line :a)is ...
Equilibrium Point of Consumer

The equilibrium point of a consumer is the point at which the consumer maximizes his/her utility subject to the budget constraint. In other words, the consumer is in equilibrium when he/she is spending all of their income in the best possible way.

Budget Line

The budget line is a graphical representation of the budget constraint faced by the consumer. It shows all the possible combinations of two goods that the consumer can buy with a given level of income and prices of the goods.

Indifference Curve

An indifference curve is a graph that shows all the possible combinations of two goods that give the consumer the same level of utility or satisfaction.

Equilibrium Point

The equilibrium point of a consumer is the point at which the budget line is tangent to an indifference curve. This means that the consumer is spending all of their income in the best possible way, and any further increase in the consumption of one good will lead to a decrease in the consumption of the other good.

Option C

Therefore, the correct answer is option C, as the consumer is in equilibrium at a point where the budget line is tangent to an indifference curve.
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The consumer is in equilibrium at a point where the budget line :a)is above an indifference curve.b)is below an indifference curve.c)is tangent to an indifference curve.d)cuts an indifference curve.Correct answer is option 'C'. Can you explain this answer?
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