An optimizing consumer will select the consumption bundle in which the marginal rate of substitution
A)is equal to the price of the least-expensive good.
B)exceeds the marginal utility of each good by the greatest amount.
C)is less than the slope of the budget constraint.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

An optimizing consumer will select the consumption bundle where the marginal rate of substitution (MRS) is equal to the slope of the budget constraint, which is the ratio of the prices of the goods, not any of the options provided.

An Optimizing Consumer Will Select the Consumption Bundle in Which