52 consumer demand the optimal choice of goods 1 and

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Unformatted text preview: the budget line at an interior optimum. Economic meaning: - MRS: rate of exchange at which the consumer is just willing to stay put - the market is offering a rate of exchange to the consumer of −p1/p2 (you give up one unit of good 1, you can buy p1/p2 units of good 2) à༎ If the consumer is at a consumption bundle where he or she is willing to stay put, it must be...
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This note was uploaded on 02/25/2014 for the course ECON 212 taught by Professor Mirobins during the Spring '08 term at Mt. Holyoke.

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