A utility maximizer will always choose a bundle at which his indifference curve is tangent to his budget line.

Is the following statement true or false? Briefly explain your answer. “A utility maximizer will always choose a bundle at which his indifference curve is tangent to his budget line.”

Expert Solution

FALSE

The given statement about the utility maximizer is false.

“A utility maximizer will always choose a bundle at which his indifference curve is tangent to his budget line.” is a wrong statement.

The optimal bundle will be a corner solution in certain situations. Hence the above statement is false.

Rahul Sunny answered 2 years ago

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Question

A utility maximizer will always choose a bundle at which his indifference curve is tangent to his budget line.

Solutions

Expert Solution

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