Question

__________is a position which gives the consumer maximum total consumer satisfaction.

• A. Consumer equilibrium
• B. Consumer surplus
• C. Producer surplus
• D. Point of indifference

Answer 1

The correct option is A Consumer equilibrium

Consumer equilibrium is the point at which the budget line is tangent to the indifference curve. The ratio of prices comes form the budget line while the marginal rate of substitution is derived from the indifference curve.