According to the economic assumptions about consumer choice, could Mary have optimally chosen to purchase one mask and 48 units of other goods per day?

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BlackTom AI · Accepted Answer

The question asks about whether Mary could have optimally chosen a basket consisting of one mask and 48 units of other goods per day, under the economic assumptions about consumer choice.
First, note that there are no answer options provided for us to compare. In such cases, we can still evaluate the given proposed answer statement in light of standard consumer theory.
The proposed statement is: 'No, even though this basket was affordable, it was not optimal because it was to the south-west of the budget line.'
Under typical consumer choice with monotonic preferences (goods are desirable and more is better) and a stable budget, any affordable (feasible) bundle that is not on the budget line is interior relative to the budget constraint. If preferences are strictly increasing in both goods, the consumer can always reach a higher indifference curve by spending more of the budget, i.e., by moving toward and onto the budget line, without violating the budget. Therefore, an interior bundle—one that lies strictly inside or to the south-west of the budget line—cannot be the utility-maximizing choice because a higher level of consumption along the budget line would yield higher utility.
This logic makes the judgement in the statement coherent: a bundle that is affordable but lies to the south-west of the budget line is not optimal, since the optimal point should typically lie on the budget line given positive marginal utilities and no satiation that would cap consumption at a lower level.
However, it is worth noting a caveat: if Mary’s preferences exhibited satiation or the goods included a bad or inferior good, or if there were binding non-negativity constraints that prevented increasing both goods, certain interior solutions could in principle be optimal. In standard teaching, with goods that are desirable and no satiation, the optimal point lies on the budget line, and any bundle south-west of it would be suboptimal.
In summary, the claim that an affordable basket located south-west of the budget line is not optimal aligns with the core idea that, with typical goods and monotone preferences, the optimal choice lies on the budget line, making interior (south-west) bundles suboptimal.

SIPAIA6400_001-002_2025_3 - Microeconomic Analysis for International and Public Affairs

According to the economic assumptions about consumer choice, could Mary have optimally chosen to purchase one mask and 48 units of other goods per day?

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