3 questions. Try each one, then open the answer to check yourself and read the explanation.
From the graph above the consumer will attain equilibrium at point
Answer: B (K)
The consumer is in equilibrium where the budget line just touches the highest indifference curve it can reach, which is point K on U2.
Given that Y = C + I, where C = 50 + 0.75Y and I = ₦ 45m, what is the equilibrium level of income?
Answer: B (₦380m)
Y = 50 + 0.75Y + 45, so 0.25Y = 95 and Y = 95 ÷ 0.25 = ₦380m.
From the diagram above, the optional point of production is
Answer: C (S)
The best (least-cost) point is where the isocost line just touches the highest isoquant it can reach: point S on isoquant II.