Whenever a consumer purchases good X but not good Y, then A) MRS_XY = P_X/P_Y at the chosen bundle B) MRS_XY

Question

Whenever a consumer purchases good X but not good Y, then A) MRS_XY >= P_X/P_Y at the chosen bundle B) MRS_XY <= P_X/P_Y at the chosen bundle C) MRS_XY = P_X/P_Y at the chosen bundle D) MRS_XY = -P_X/P_Y at the chosen bundle

Quizplus · Accepted Answer

When a consumer purchases good X but not good Y, it indicates that the marginal rate of substitution (MRS) of X for Y is greater than or equal to the price ratio, meaning the consumer values X more relative to Y than the market does.

Whenever a Consumer Purchases Good X but Not Good Y