A consumer equilibrium is found where:

Question

Quizplus · Accepted Answer

Consumer equilibrium is found where the budget line and indifference curve are tangent. This means that the consumer has maximized their utility given their budget constraint, which occurs when they are consuming a bundle of goods at which the marginal rate of substitution (MRS) is equal to the price ratio of the two goods. This is represented graphically by the point at which the budget line is tangent to the highest attainable indifference curve.

A Consumer Equilibrium Is Found Where