Question

figure 10 - 2 represents the demand for ice - cream cones. refer to figure 10 - 2. which of the following statements is true? points a and b may not necessarily be the utility - maximizing quantities of ice - cream cones at two different prices because we have no information on consumers budget or the price of other goods. point a could be a utility - maximizing choice if the price is $3 but point b may not be because we have no information on price change. points a and b are the utility - maximizing quantities of ice - cream cones at two different prices. points a and b are derived independently of the utility - maximizing model.

Explanation:

The demand - curve represents the quantity of ice - cream cones demanded at different prices. Utility - maximizing choices are based on consumer preferences, budget constraints, and prices of all goods. Without information on the consumer's budget and prices of other goods, we cannot be sure if points on the demand curve are utility - maximizing. Point a could be a utility - maximizing choice at a price of $3.

Answer:

Point a could be a utility - maximizing choice if the price is $3 but point b may not be because we have no information on the consumer's budget or the price of other goods.