Which of the following indifference curves maximizes utility or satisfaction given the consumer’s budget line for sodas and cookies?

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Question

Which of the following indifference curves maximizes utility or satisfaction given the consumer’s budget line for sodas and cookies?

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BlackTom AI · Accepted Answer

To determine which indifference curve yields the highest satisfaction given the budget line, we assess which curves are affordable and which lie as far from the origin as possible along the budget constraint.
Option analysis:
- U1: This curve lies closer to the origin, representing a lower level of utility. Since it is located inside the set of curves that could be reached with the budget, it indicates less overall satisfaction than higher curves. As a result, it cannot be the maximum attainable utility given the budget.
- U4: This is the outermost curve shown on the graph, appearing to lie outside the budget line. If the budget constraint cannot reach this curve, it is not affordable, so it cannot maximize utility under the budget.
- U2: This curve sits just at the boundary where the budget line is tangent to the indifference curve. A tangent (or touchpoint) between the budget constraint and an indifference curve indicates the highest attainable level of utility given the budget, because any higher curve would require more of at least one good than the budget allows.
- U3: This curve lies above U2 but appears not to intersect the budget line within the feasible region, meaning it is not affordable with the given budget. Therefore it cannot maximize utility under the constraint.
In summary, among the options, the curve that the budget line just touches represents the greatest affordable utility. The tangent point shown by the graph corresponds to the indifference curve that is highest among those available to the consumer within the budget, while the higher curves shown outside the budget are unattainable and the lower curves lie strictly within the feasible set without fully exploiting the budget.

Which of the following indifference curves maximizes utility or satisfaction given the consumer’s budget line for sodas and cookies? \

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