Question

1. At consumer equilibrium as it relates to indifference curves, which statement is correct? (2 pts)
   • marginal rate of substitution equals market rate of substitution
   • the slope of marginal rate of substitution equals zero
   • consumers cannot express preferences for a combination of goods and services
   • none of the above

Answer 1

Consumer can't express preference for a combination of goods and services.

( Consumer equlibrium is reached when budget line is tangent to the highest possible indifference curve. A Consumer is able to derive maximum satisfaction at that point. So, he or she is no position to express a preference for a combination of goods and services.

Other statements are incorrect.

* At consumer equlibrium, marginal rate of substitution equals the price ratio

* Slope of indifference curve equals the slope of budget line.)