Question: 3. APPENDIX KEY QUESTION Using Figure A7-4, explain why the point of tangency of the budget line with an indifference curve is the consumers equilibrium

3. APPENDIX KEY QUESTION Using Figure A7-4, explain why the point of tangency of the budget line with an indifference curve is the consumer’s equilibrium position.

Explain why any point where the budget line intersects an indifference curve is not equilibrium. Explain: “The consumer is in equilibrium where MRS = PB/PA.”

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