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.”

Solutions

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 1 year ago

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