more utility at a point like F on the higher indifference curve Uh, but the budget line does not touch the higher

indifference curve Uh at any point, so she cannot afford this choice. A choice like G is affordable to Lilly, but it lies on

indifference curve Ul and thus provides less utility than choice B, which is on indifference curve Um.

The choice of F with five books and 100 doughnuts is highly desirable, since it is on the highest indifference

curve Uh of those shown in the diagram. However, it is not affordable given Lilly’s budget constraint. The

choice of H with three books and 70 doughnuts on indifference curve Ul is a wasteful choice, since it is inside

Lilly’s budget set, and as a utility-maximizer, Lilly will always prefer a choice on the budget constraint itself.

Choices B and G are both on the opportunity set. However, choice G of six books and 48 doughnuts is on lower
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