Economics · Consumer Behaviour
Which of the following statements is INCORRECT regarding a consumer's equilibrium position?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It is a point where the marginal rate of substitution of X for Y (MRSXY) is equal to the price ratio PXPY.
- 2It is a point where the rate at which the consumer is willing to substitute one good for the other equals the rate at which they can substitute them in the market.
- 3It is a point where the total value of the slope of the indifference curve ΔYΔX is equal to the reciprocal of the price ratio.✓
- 4It is a point where the budget line is tangent to the indifference curve.
Correct answer
It is a point where the total value of the slope of the indifference curve ΔYΔX is equal to the reciprocal of the price ratio.
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