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(Figure: The Optimal Consumption Bundle) Use Figure The Optimal Consumption Bundle.Which of the following could lead to an optimal consumption bundle on indifference curve I3?
A) an increase in income
B) an increase in the price of restaurant meals
C) an increase in the price of rooms
D) a decrease in income
Optimal Consumption
The mix of goods and services that maximizes consumer utility or satisfaction given their budget constraints.
Indifference Curve
A graph showing different combinations of two goods among which a consumer is indifferent.
Increase in Income
A situation where an individual or entity experiences a rise in their earnings or revenue over a period.
- Assess the influence of income and substitution on consumer selection and demand patterns.
- Describe the association between indifference curves and the maximization of utility principle.
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Learning Objectives
- Assess the influence of income and substitution on consumer selection and demand patterns.
- Describe the association between indifference curves and the maximization of utility principle.
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