If a consumer\'s marginal rate of substitution is greater than the relative pric

Question

If a consumer's marginal rate of substitution is greater than the relative price of the goods, the consumer is perhaps at his or her best affordable point. at his or her best affordable point. not at his or her best affordable point and should move along his or her indifference curve to a higher budget line. not at his or her best affordable point and should move along his or her budget line to a higher indifference curve. More information is needed to determine if the consumer is or is not at his or her best affordable point.

Explanation / Answer

Ans is C)

This is because marginal rate of substitution represents the rate at which one good is substituted for other while maintaining the same level of utility.

At point of optimum MRS=relative price

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