Read the two statements and choose the correct option.
I. At the optimum, the indifference curve and the budget line have the same slope.
II. At the optimum, the indifference curve is convex to the origin.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

I is the tangency condition, MRS = P₁ ÷ P₂: true.
II is true too: convexity is what makes the tangency point the best one, not just any touching point.

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

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

Read the two statements and choose the correct option.I. At the optimum, the indifference curve and the budget line have the same slope.II. At the optimum, the indifference curve is convex to the origin.