For the consumer to be at an optimum, it must be the case that A) $ M R S_{C, C^{\prime}}=\frac{1}{(1+r)} $ B) $ M R S_{C, C^{\prime}}=(1+r) $ C) $ M R T_{C, C^{\prime}}=\frac{1}{(1+r)} $ D) MRT_c,c' = (1 + r). E) MRS_c,c' = we(1 + r).

Question

Quizplus · Accepted Answer

The consumer is at an optimum when the marginal rate of substitution (MRS) between current and future consumption equals the marginal rate of transformation (MRT), which is typically represented by (1 + r), where r is the interest rate.

For the Consumer to Be at an Optimum, It Must MRSC,C′=1(1+r) M R S_{C, C^{\prime}}=\frac{1}{(1+r)} MRSC,C′​=(1+r)1​

For the Consumer to Be at an Optimum, It Must $M R S_{C, C^{\prime}}=\frac{1}{(1+r)}$