The Tangency Condition for the Optimal Choice for a Consumer $\mathrm { MRS } _ { x , y } = P _ { y } / P _ { x }$

question 35

Multiple Choice

The tangency condition for the optimal choice for a consumer is given by:

• A) \(\mathrm { MRS } _ { x , y } = P _ { y } / P _ { x }\)
• B) \(\mathrm { MU } _ { x } / \mathrm { MU } _ { y } = 1\)
• C) \(\mathrm { MRS } _ { x , y } = P _ { x } / P _ { y }\)
• D) \(\mathrm { MU } _ { x } / \mathrm { MU } _ { y } = P _ { y } / P _ { x }\)

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Definitions:

Toronto 35 Index

An index that was once used to represent the performance of the 35 most significant stocks listed on the Toronto Stock Exchange.

Basis

In finance, refers to the difference between the spot price of an asset and its future price, or to the initial value used for tax purposes.

Futures Price

The agreed-upon price for the purchase or sale of an asset at a future date in a futures contract.

Spot Price

The current market price at which an asset, such as securities, commodities, or currencies, can be bought or sold for immediate delivery.