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When a Consumer's Marginal Rate of Substitution Between X and Y

Question 46

Multiple Choice

When a consumer's marginal rate of substitution between X and Y is equal to the ratio of prices for X and Y,and when the consumer is spending all available income,then


A) the budget line is tangent to an indifference curve.
B) the consumer is not maximizing his utility.
C) a higher indifference curve can be reached given the existing budget line.
D) the budget line is tangent to the indifference curve at all quantities of X and Y.
E) all budget lines are tangent to all indifference curves.

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