how will with the consumption of good x and y in a situation when MRS=Px/Py?
Dear Student,
Good attempt made by nancy as the answer provided by her is correct. We understand that a consumer attains equilibrium at the point where the budget line is tangent to the indifference curve. i.e.
MRS=
As the consumer has reached the equilibrium position on this particular IC, he/she will be in a position of rest and hence will not change their consumption bundle.
Good attempt made by nancy as the answer provided by her is correct. We understand that a consumer attains equilibrium at the point where the budget line is tangent to the indifference curve. i.e.
MRS=
As the consumer has reached the equilibrium position on this particular IC, he/she will be in a position of rest and hence will not change their consumption bundle.