passwella.
Menu

JAMB Economics 2004 Question 35

Question 35

Theory of Consumer Behaviour

In the diagram above, ST is the budget line while I, II and III represent indifference curves. A rational consumer will choose to consume at point

Diagram for this question
  1. A.M
  2. B.J
  3. C.K
  4. D.L
Show the answer and explanation

Answer: D (L)

Explanation

Use the diagram. The consumer reaches the highest indifference curve the budget allows where the budget line just touches a curve; that is point L on curve II. M is unaffordable, and K and J give lower satisfaction.