Question

For consumer’s equilibrium to be stable, the requirement is ______.

Options

• Constant MRS

• Increasing MRS

• Diminishing MRS

• None of these

Answer 1

For consumer’s equilibrium to be stable, the requirement is Diminishing MRS.

Explanation:

Stable equilibrium requires diminishing MRS, represented by a convex indifference curve. Constant or increasing MRS does not provide the standard stability condition.