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Unilorin Post-UTME Economics 2023 (Model questions) Question 7

Question 7

Theory of Consumer Behaviour

The point where an indifference curve is tangent to the budget line is ________

  1. A.consumer behavior
  2. B.consumer equilibrium
  3. C.isoquant
  4. D.isoquant
Show the answer and explanation

Answer: B (consumer equilibrium)

Explanation

Where the highest reachable indifference curve just touches the budget line, the consumer maximises satisfaction: consumer equilibrium.