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Why should the consumer’s optimum point be located on the budget line?

Asked by Topperlearning User 25th April 2016, 11:03 AM
Answered by Expert

Any point on the budget line other than the point at which it touches the indifference curve lies on a lower indifference curve. At this inferior point, the consumer cannot be optimum. Therefore, the optimum bundle is located at a point where the budget line is tangent to an indifference curve.

Answered by Expert 25th April 2016, 1:03 PM
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