The Consumer is in equilibrium when:

CA Foundation · Business Economics · MTP · January 2026
The Consumer is in equilibrium when:
(A) A. The budget line is tangent to the Indifference Curve
(B) B. Marginal rate of Substitution of one good for another must be equal to the Price ratio of the two goods
(C) C. Either a or b
(D) D. None of these

Suggested Answer and Working Notes:

Correct Answer: Option (A)

A. The budget line is tangent to the Indifference Curve

Topics: Theory of Demand and Supply

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