Question

When a consumer is in equilibrium this means that he or she is: A. maximizing his or her income. B. consuming goods with the highest total utility. C. consuming the best market basket, given his or her preferences, income, and prices. D. consuming the largest market basket possible.

Answer 1

Answer:

The correct answer is letter "C": consuming the best market basket, given his or her preferences, income, and prices.

Explanation:

Consumer equilibrium implies the point in which their needs are being met according to the resources available consumers are willing to use. This state is achieved when individuals have optimized their basket of goods in quality and quantity according to their expectations. Such a scenario also implies consumers' income has not been negatively affected and prices of the goods purchased are at their corresponding equilibrium point.  

To conclude, the consumer equilibrium takes place when both the market and customers' expectations are aligned.