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Question
If the consumer is below his budget line, the consumer ______________.
If the consumer is below his budget line, the consumer ______________.
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Solution
The correct option is A is not spending all personal income
When the consumer is not spending all his income, he/she is inefficient with the current group of goods purchased. The optimal point for the consumer is the point at which the indifference curve is tangent to the budget line.
When the consumer is not spending all his income, he/she is inefficient with the current group of goods purchased. The optimal point for the consumer is the point at which the indifference curve is tangent to the budget line.
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