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A consumer maximizes utility at the point where the amount of good Y (on the vertical axis) he would be willing to give up to
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Answer #1

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The amount of commodity y that consumer is willing to give up to get one additional unit of commodity x is actually measuring the marginal rate of substitution. marginal rate of substitution should be equal to the price ratio at the tangency point between indifference curve and budget line. At this particular consumption bundle utility is maximized. This is given by MRS(of x for y) = Px/Py

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