When a consumer is at equilibrium, the MRS_xy is equal to the

enero1

4 years ago

correct answer is c : when a cosumer is in equilibrium using the indifferent curve approach, the indifference curve will be tangent to the budget line. Thus, the MRS is the rate of substituting one of the product for the other and its always negative. At equilibrium, the MRS is equal to the ratio of the prices of both commodity.

Moyo_56

5 months ago

even their AI chose C

Dean3518

10 years ago

The ans is C

NOTABENE2021

4 years ago

Option C
Explanation: If MRSXY < PX/PY, it means that the consumer is willing to pay less for X than the price prevailing in the market. It induces the consumer to buys less of X and more of Y. As a result, MRS rises till it becomes equal to the ratio of prices and the equilibrium is established.