If Rachel is at her best affordable point, then _______.
A) the relative price of the goods she buys equals the marginal rate of substitution
B) she is indifferent among other points on her budget line
C) her marginal rate of substitution is maximised
D) her marginal rate of substitution equals 1

Question

Quizplus · Accepted Answer

At her best affordable point, Rachel's consumption choices are such that the marginal rate of substitution (MRS) between any two goods equals the relative price of those goods. This ensures that she is maximizing her utility given her budget constraint.

If Rachel Is at Her Best Affordable Point, Then _______