The consumer's optimum is where A) MU_x/MU_y = P_y/P_x. B) MU_x/P_y = MU_y/P_x. C) P_x/MU_x = P_y/MU_y. D) MU_x/MU_y = P_x/P_y.

Name: The consumer's optimum is where A) MU x /MU y = P y /P x . B) MU x /P y = MU y /P x . C) P x /MU x = P y /MU y . D) MU x /MU y = P x /P y .
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Question

Quizplus · Accepted Answer

The consumer's optimum is achieved when the marginal rate of substitution (MRS) between two goods (MUx/MUy) equals the ratio of their prices (Px/Py).

The Consumer's Optimum Is Where