At the Optimal Consumption Bundle, the Marginal Rate of Substitution

question 26

Multiple Choice

At the optimal consumption bundle, the marginal rate of substitution of leisure for consumption is equal to

• A)the real wage and the budget line is tangent to an indifference curve.
• B)minus the real wage and the budget line intersects the indifference curve.
• C)the real wage and the budget line intersects the indifference curve.
• D)minus the real wage and the budget line is tangent to the indifference curve.
• E)the real wage and on the highest possible indifference curve.

---

Definitions:

Contra Asset

An account on a company's balance sheet that offsets against an asset account on the same balance sheet.

Miscellaneous Revenue

Income from sources other than the main business activities, such as rental income or interest income.

Cash Over And Short

An account that records the discrepancies between the actual cash received and the expected amount.

Credit Balance

An accounting term that signifies a positive balance in a liability, revenue, or equity account, which increases on the credit side and decreases on the debit side.