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JAMB Economics 2014 Question 11

Question 11

Theory of Consumer Behaviour

Use the graph below to answer the question.
From the graph above, the consumer will attain equilibrum at point

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

Answer: D (K.)

Explanation

Equilibrium is where a budget line just touches an indifference curve. The outer budget line touches U2 at K; L is out of reach and M is not a point of tangency.