Economics · Microeconomics
Consider a consumer with strictly monotonic and locally non-satiated preferences. If at the optimum the consumer chooses an interior bundle and the budget constraint is linear, which of the following must necessarily hold?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Utility is maximized at a corner solution
- 2Hicksian and Marshallian demands coincide
- 3Marginal utility of income is zero
- 4Marginal rate of substitution equals the price ratio✓
Correct answer
Marginal rate of substitution equals the price ratio
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