Which property characterizes the consumption bundle selected by an optimizing consumer
A)The ratio of total utilities is equal to the relative price.
B)The ratio of income to price equals the marginal rate of substitution.
C)The marginal rate of substitution is equal to the relative price.
D)The marginal rate of substitution is equal to income.

Question

Quizplus · Accepted Answer

The optimizing consumer selects a consumption bundle where the marginal rate of substitution (MRS) between two goods is equal to the relative price of those goods, ensuring that the consumer maximizes utility given their budget constraint.

Which Property Characterizes the Consumption Bundle Selected by an Optimizing