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JAMB Economics 2001 Question 3

Question 3

Theory of Consumer Behaviour

At consumer equilibrium, the slope of the indifference curve is

  1. A.half the slope of the budget constraint line
  2. B.equal to the slope of the budget constraint line
  3. C.greater than the slope of the budget constraint line
  4. D.less than the slope of the budget constraint line
Show the answer and explanation

Answer: B (equal to the slope of the budget constraint line)

Explanation

The consumer is in equilibrium where the budget line just touches (is tangent to) the highest indifference curve, so their slopes are equal.