At a corner solution,which of the following is know to be true?
A) The slope of the indifference curve equals the slope of the budget line.
B) The slope of the indifference curve is greater than the slope of the budget line.
C) The slope of the indifference curve is less than the slope of the budget line.
D) The slope of the indifference curve does not equal the slope of the budget line.

Question

Quizplus · Accepted Answer

At a corner solution, the optimal bundle of goods for a consumer is found at the corner (or edge) of the feasible set, meaning the consumer chooses to consume only one of the goods. This situation occurs when the indifference curve and the budget line do not have the same slope at the point of tangency, indicating that the marginal rate of substitution between the two goods does not equal the ratio of their prices. Therefore, the slope of the indifference curve does not equal the slope of the budget line.

At a Corner Solution,which of the Following Is Know to Be