Question : How many enormous curves can intersect the budget line:
Option 1: One
Option 2: Two
Option 3: Three
Option 4: None of the above.
Answer (1)
15th Jan, 2024
Correct Answer: One
Solution :
The consumer achieves equilibrium at a point on the highest possible indifference curve that fits the consumer's budget given the prices of both commodities. Only when the budget line is tangent to the indifference curve is such a point possible.
Therefore, only one indifference curve can touch the budget line.
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