Where the consumer's optimal consumption occurs, _____ equals the slope of the budget constraint line expressed as a positive number.
A) the substitution effect
B) total utility
C) the marginal rate of substitution
D) equilibrium

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) equals the slope of the budget constraint line (expressed as a positive number) at the point of optimal consumption. This is because the MRS reflects the rate at which a consumer is willing to substitute one good for another while maintaining the same level of utility, and at the optimal consumption point, this rate matches the rate at which the market allows substitution (as indicated by the budget constraint's slope).

Where the Consumer's Optimal Consumption Occurs, _____ Equals the Slope