The diagram below shows the production curve (PPC) for a country producing bread and butter. An individual's preferences are represented by the indifference curves. Which of the following, A, B, C or D, is the highest level of utility attainable to the consumer?

The diagram shows a Production Possibility Curve (PPC), which represents the maximum output combinations of bread and butter a country can produce. The dashed curves (U1, U2, U3) are indifference curves, representing different levels of consumer utility, with higher curves indicating higher utility (U3 > U2 > U1). The straight line XZ represents the consumption possibilities or budget constraint for the consumer, given the prices of bread and butter.

The consumer can choose any point on or below the budget line XZ. The goal is to reach the highest possible indifference curve while staying within this budget.

• Point A lies on indifference curve U3 and is on the budget line XZ.
• Point B lies on indifference curve U2 and is on the budget line XZ.
• Point C lies on indifference curve U1 and is on the budget line XZ.
• Point D lies on indifference curve U2 but is inside the budget line XZ, meaning it's attainable but not maximizing utility given the budget.

The highest level of utility is achieved when the consumer reaches the highest possible indifference curve that is tangent to or touches their budget line. In this diagram, the budget line XZ is tangent to indifference curve U3 at point A. Since U3 represents a higher level of utility than U2 or U1, point A offers the highest utility among the given options that are attainable within the consumer's budget.

The highest level of utility attainable to the consumer is at point A.