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For a consumer to be equilibrium why must marginal rate of substitution be equal to the ratio of prices of two goods?
 11 months ago
 11 months ago
For a consumer to be equilibrium why must marginal rate of substitution be equal to the ratio of prices of two goods?
 11 months ago
 11 months ago

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ANGELNAVBest ResponseYou've already chosen the best response.1
bcoz v need tangency of budget line to the IC for maximising utility, n for that, slopes of both must b equal i.e. MRS(slope of IC)=P1/P2(slope of budget line)
 11 months ago

surjeetBest ResponseYou've already chosen the best response.0
In order to maximize utility this condition must be satisfied... and as you know more is better for consumer..
 10 months ago
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