Question

explain why a consumer is in equilibrium only at yhe point of tangency between in different curve and budget line ? use diagram... tell fast plzz​

Answer 1

Answer:

Indifference curve should be convex to the point of origin

It means that marginal substitution rate between X and Y (MRSXY) should be diminishing. ... A consumer will therefore be in equilibrium when at the point of tangency of indifference curve and the budget line, the indifference curve is convex to the origin.

Explanation:

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Answer 2

Answer:

The indifference curve is tangent to the budget line when the consumer is maximizing his or her utility.Only a point that lies on the budget line can be the equilibrium point because of the fact that only the combination of goods as represented by these points is affordable by the consumer given his income. ... This suggests that the consumer can have more of at least one of the goods and no less of the other.

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