Asked by Alessia Marie on Jun 26, 2024

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Which of the following claims is true at each point along a price-consumption curve?

A) Utility is maximized but income is not all spent.
B) All income is spent, but utility is not maximized.
C) Utility is maximized, and all income is spent.
D) The level of utility is constant.

Price-Consumption Curve

Curve tracing the utility-maximizing combinations of two goods as the price of one changes.

Utility

A measure of satisfaction or happiness that a consumer derives from the consumption of goods and services.

  • Grasp the principle of utility maximization and income allocation.
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SG
sanchit gangwalJun 30, 2024
Final Answer :
C
Explanation :
The price-consumption curve shows the different combinations of two goods that a consumer can purchase at different price levels. At each point along the curve, the consumer maximizes their utility by choosing the combination that gives the highest level of satisfaction for the given income and prices. This means that utility is maximized at each point. Additionally, since the curve represents the budget constraint of the consumer, all income is spent at the chosen combination of goods. Therefore, choice C is the correct answer.