5.18 : 소비자 선택 III

The bundle that provides the maximum satisfaction to a consumer lies at the point where the highest indifference curve touches the budget line.

For example, Neil gets the maximum possible satisfaction from bundle A, showing monthly consumption of Good X and Good Y. At this point, the budget line BL is tangent to the indifference curve IC2. It means the slope of the indifference curve is equal to the slope of the budget line.

The slope of an indifference curve is the Marginal Rate of Substitution or MRS. It is the quotient of change in the quantity of Good Y and Good X.

The slope of the budget line is the price ratio, which is the ratio of the per unit price of Good X to the per unit price of Good Y.

When Neil's MRS equals the price ratio, it means he is maximizing his satisfaction given his budget.

This analysis helps to understand how consumers make choices when they have limited resources.