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JAMB Economics 2011 Question 20

Question 20

Theory of Consumer Behaviour

Use the diagram below to answer the question.
From the diagram above, the optimal point of production is

Diagram for this question
  1. A.R
  2. B.T
  3. C.U
  4. D.S.
Show the answer and explanation

Answer: D (S.)

Explanation

The best point is where the budget line just touches the highest indifference curve it can reach. That is S on curve II; R is unaffordable and U and T are on a lower curve.