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Exponential Growth

Write true or...

Question

Write true or false with a reason:
A consumer strikes his equilibrium when: $M R S_{X Y} = \frac{P X}{P Y}$ .

True

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False

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Solution

The correct option is A True
True.
In terms of indifference curve approach, a consumer strikes his equilibrium when.
Slope of IC = Slope of Price Line
Or
$M R S_{X Y} = \frac{P_{X}}{P_{Y}}$
It is here only that the consumer maximises his satisfaction (given $P_{X}, P_{Y}$ and income of the consumer).

Suggest Corrections

Similar questions

M R S_{X Y} > \frac{P_{X}}{P_{Y}}

M R S_{X Y} = \frac{P_{X}}{P_{Y}}

M R S_{X Y} < \frac{P_{X}}{P_{Y}}

X

Y

P_{X}

P_{Y}

M R S_{X Y} > \frac{P_{X}}{P_{Y}}

M R S_{X Y} = \frac{P_{X}}{P_{Y}}

M U_{X} = M U_{Y} = M U_{M}

P_{X}

P_{Y}

\frac{M U_{X}}{P_{X}} = M U_{M}

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