Question : If a consumer is in equilibrium, the consumer's marginal rate of substitution (MRS) must be equal to:
Option 1: The price of X.
Option 2: The price of Y.
Option 3: The ratio of marginal utilities.
Option 4: The ratio of prices.
Correct Answer: The ratio of prices.
Solution : The correct answer is (d) The ratio of prices. The MRS represents the rate at which a consumer is willing to exchange one good for another while maintaining the same level of satisfaction. In equilibrium, this rate of substitution should be equal to the price ratio of the goods, as the consumer seeks to allocate their budget efficiently.
Question : Consumer equilibrium is the point at which_________
Option 1: MU < Price
Option 2: MU = Price
Option 3: MU > Price
Option 4: None of the above
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