Practice mode Consumer Theory vs. Real Consumers

Which of the following holds at a consumer’s optimum consumption bundle?

Correct answer E. All of these answers are true

Explanation

At the optimum the indifference curve just touches the budget line. Tangency means equal slopes, and since the budget line's slope is the price ratio, the MRS equals relative prices.

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Which of the following holds at a consumer’s optimum consumption bundle?

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Which of the following holds at a consumer’s optimum consumption bundle?

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