Consumer equilibrium exists when the
A)slope of the indifference curve is greater than the slope of the budget constraint.
B)consumer is on his highest indifference curve.
C)marginal rate of substitution is greater than the slope of the budget constraint.
D)slope of the indifference curve equals the slope of the budget constraint.

Question

Quizplus · Accepted Answer

Consumer equilibrium exists when the slope of the indifference curve equals the slope of the budget constraint, which represents the optimal point where the consumer gets the most satisfaction given their budget constraint. At this point, the consumer is maximizing their utility and any other point will result in either less satisfaction or overspending their budget.

Consumer Equilibrium Exists When the