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

Question 93

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

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