When a Consumer's Marginal Rate of Substitution Between X and Y

question 66

Multiple Choice

When a consumer's marginal rate of substitution between X and Y is equal to the ratio of prices for X and Y,and when the consumer is spending all available income,then

• A)the consumer is not maximizing his utility.
• B)the budget line is tangent to the indifference curve at all quantities of X and Y.
• C)a higher indifference curve can be reached given the existing budget line.
• D)all budget lines are tangent to all indifference curves.
• E)the budget line is tangent to an indifference curve.

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Definitions:

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