By selecting a bundle where MRS = MRT,the consumer is
A) achieving a corner solution.
B) reaching the highest possible indifference curve she can afford.
C) not behaving in an optimal way.
D) All of the above.

Question

Quizplus · Accepted Answer

Selecting a bundle where MRS (marginal rate of substitution) is equal to MRT (marginal rate of transformation) indicates that the consumer is allocating their resources efficiently and reaching the highest possible indifference curve they can afford. Therefore, option B is the correct answer. Option A is incorrect because achieving a corner solution means that the consumer is not maximizing their utility. Option C is incorrect because selecting the bundle where MRS = MRT is an optimal behavior.

By Selecting a Bundle Where MRS = MRT,the Consumer Is