At the best affordable point, consumers equate their marginal rates of substitution to

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Quizplus · Accepted Answer

At the affordable point, consumers have maximized their utility, hence equating their marginal rate of substitution (MRS) to the ratio of relative prices. This means that the consumer is indifferent between the last unit of goods purchased and the money spent, which represents the maximum satisfaction or utility they can obtain, given their income constraint. Therefore, relative prices are the most relevant factor for determining the point of affordability for the consumer.

At the Best Affordable Point, Consumers Equate Their Marginal Rates