# When The Optimal Point On An Indifference Curve And Budget Line Diagram Is A Corner Solution,

The budget line must have a kink in it. The marginal rate of substitution between the two goods equals the ratio of their prices.

Econ302 Solutions For Practice Questions 4

### The marginal rate of substitution usually does not equal the ratio of prices for the two goods.

When the optimal point on an indifference curve and budget line diagram is a corner solution. The budget line intersects with the point 22 along the pink indifference curve indicating that we can hire chris for 2 hours and sammy for 2 hours and spend the full 40 budget if we so choose. The consumer spends his or her entire budget on the two goods. 3 when the optimal point on an indifference curve and budget line diagram is a corner solution a the budget line must have a kink in it.

The marginal rate of substitution usually does not equal the ratio of prices for the two goods. At the optimal point on an indifference curve and budget line diagram interior solution a the optimal indifference curve is tangent to the budget line. The slope of the budget line will change but in an indeterminate way.

In case of concave indifference curves the consumer will not be in equilibrium at the point of tangency between budget line and indifference curve that is in this case interior solution will not exist. When the optimal point on an indifference curve and budget line diagram is a corner. The budget line will become steeper.

When the optimal point on an indifference curve and budget line diagram is a corner solution a.

D the budget line becomes flatter. The consumer does not spend her entire budget on the two goods.

All of the above. 1 when the optimal point on an indifference curve and budget line diagram is a corner solution. B the consumer spends his or her entire budget on the two goods.

Using indifference curves to think about the point on the budget line that maximizes total utility watch the next lesson. B the marginal rate of substitution usually does not equal the ratio of prices for the two goods. C the marginal rate of substitution between the two goods equals the ratio of their prices.

The marginal rate of substitution usually does not equal the ratio of prices for the two goods. The optimal indifference curve is tangent to the budget line when the optimal point on an ic and bl diagram is a corner solution the marginal rate of substitution does not equal the ratio of prices for the two goods. At the optimal point on an indifference curve and budget line diagram.

Any point on our budget line brown represents a point at which we will spend our entire budget.

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