the price line is parallel to the indifference curve
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B
the price line is tangent to the indifference curve
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C
the price line cuts the indifference curve
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D
two indifference curves cut each other
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Solution
The correct option is A the price line is tangent to the indifference curve Consumer achieves equilibrium at that point where the price line is tangent to the indifference curve.
In this case, the point where the price line is tangent to the indifference curve represents the minimum cost that the consumer will have to incur in order to obtain a certain level of utility given by the indifference curve.