why is MRS equal to ratio of prices two goods
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In other words, the MRS (the slope of the indifference curve) must be equal to the price ratio (the slope of the budget line). The reason is that otherwise the consumer could reach a higher indifference curve within the same budget set by altering the chosen bundle.
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The reason is that otherwise the consumer could reach a higher indifference curve within the same budget set by altering the chosen bundle.
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