If a Consumer's Marginal Rate of Substitution Is Greater Than

question 158

Multiple Choice

If a consumer's marginal rate of substitution is greater than the relative price of the goods,the consumer is

• A) at his or her best affordable point.
• B) perhaps at his or her best affordable point.
• C) not at his or her best affordable point and should move along his or her indifference curve to a higher budget line.
• D) not at his or her best affordable point and should move along his or her budget line to a higher indifference curve.
• E) More information is needed to determine if the consumer is or is not at his or her best affordable point.