Assertion (A): At the optimum, the consumer spends his whole income.
Reason (R): The optimum lies on the budget line.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Both are true.
Every point on the budget line costs exactly M, so lying on it (R) is why the whole income is spent (A).

Concept: Optimum on the budget line
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe consumer's optimal choice

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Ten questions from Budget Line & Optimal Choice, at your own pace.

Practise this chapter →

Ten questions from Budget Line & Optimal Choice, at your own pace.

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Assertion (A): At the optimum, the consumer spends his whole income.Reason (R): The optimum lies on the budget line.

Explanation

Assertion (A): At the optimum, the consumer spends his whole income.
Reason (R): The optimum lies on the budget line.