Question

Consuming two goods, a consumer attain equilibrium when:

A. / = /

B. / > /

C. / < /

D. / ≠ /​

Answer 1

Answer:

A. MUx /Px = MUy /Py

Explanation:

Consuming two goods, a consumer attain equilibrium when : MUx /Px = MUy /Py.

Consumer's Equilibrium:

Consumer's Equilibrium can be defined as the Position of Maximum satisfaction.

According to Indifference Curve Approach, a consumer attains equilibrium at the point where budget line is tangent to indifference or MRS equals price ratio or Slope of indifference curve is equal to Slope of Budget line.

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