4.3.3 Consumer optimisation
The consumer can choose any combination of goods along their budget line. Consumer
rationality (see Section 4.2.1) dictates that the consumer will wish to reach the highest
possible indifference curve. Given this information we can predict the consumer’s optimal
consumption pattern.
Figure 4.9 shows a consumer’s budget line and three indifference curves.
Combinations of goods along IC3 are unavailable to the consumer as they lie above the
budget line. IC1 is available for any combination between A and C. However, in choosing
combination B (Y1 of good Y and X1 of good X) the consumer reaches the highest possi-