(Answered) The following are key characteristics of the optimal

Management Studies

The following are key characteristics of the Optimal Consumer's Allocation, as presented in class, EXCEPT:

Notation:

BC = Budget Constraint

IC= Indifference Curve

MUx = Marginal Utility for x

MUy = Marginal Utility for y

Question options:

A. The optimal allocation (X*, Y*) is the one that attains the highest consumer's utility given a certain budget constraint.

B. On the optimal allocation, the BC makes tangency with the highest attainable IC

C. For any given BC, the optimal allocation for each consumer is unique, due to the assumption of Increasing MU for X & Y.

D. At the optimal allocation the ration of prices (Px/Py) is equal to the ratio of preferences (MUx/MUy) for the consumer.

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