Chapter 1. eFigure 4.18

eFigure
E-Figure Title
Question 1 of 4

Question 1.

The graph demonstrates that point B is not the consumer’s utility maximizing bundle, and that point A describes the combination of goods X and Y that bring the consumer the most utility. Relative to the utility maximizing point A, at point B the consumer ______.

A.
B.
C.
D.

100
Correct! Comparing bundles A and B, we find that the consumer purchased too much Y and too little X at point B relative to point A. Along the y-axis, point B measures a larger quantity of Y than point A, and along the x-axis point B measures a smaller quantity of X than point A. Accordingly, to increase her utility and move to point A (from point B), the consumer should cut back on the amount of Y purchased and buy additional units of X.
Incorrect. Comparing bundles A and B, we find that the consumer purchased too much Y and too little X at point B relative to point A. Along the y-axis, point B measures a larger quantity of Y than point A, and along the x-axis point B measures a smaller quantity of X than point A. Accordingly, to increase her utility and move to point A (from point B), the consumer should cut back on the amount of Y purchased and buy additional units of X.