Consumer reach level of equilibrium when _________.

marginal utility is maximum

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total utility start falling

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marginal rate of substitution is equal to ratio of their price

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marginal rate of substitution is zero

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Solution

The correct option is C marginal rate of substitution is equal to ratio of their price
This is the point at which the budget line is tangent to the indifference curve. The ratio of prices comes form the budget line while the marginal rate of substitution is derived from the indifference curve.

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\frac{M U_{a}}{M U_{b}}

is equal to _________.

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Consumer reach level of equilibrium when _________.

The correct option is C marginal rate of substitution is equal to ratio of their priceThis is the point at which the budget line is tangent to the indifference curve. The ratio of prices comes form the budget line while the marginal rate of substitution is derived from the indifference curve.

The correct option is C marginal rate of substitution is equal to ratio of their price
This is the point at which the budget line is tangent to the indifference curve. The ratio of prices comes form the budget line while the marginal rate of substitution is derived from the indifference curve.