At the point of equilibrium slope of IC is tangent to the slope of budget line

Equilibrium in Consumer Theory

In consumer theory, equilibrium is the point at which the consumer maximizes their utility subject to their budget constraint. At this point, the consumer is consuming the bundle of goods that gives them the most satisfaction, given their income and the prices of the goods.

Indifference Curves and Budget Line

Indifference curves are graphs that show all the combinations of two goods that give a consumer the same level of utility. The slope of an indifference curve is the marginal rate of substitution (MRS) which represents the amount of one good that the consumer is willing to give up in exchange for one more unit of the other good, while maintaining the same level of utility.

The budget line is the set of all possible combinations of two goods that a consumer can purchase with their income, at given prices. The slope of the budget line is the opportunity cost of one good in terms of the other, which represents the rate at which the consumer can exchange one good for another.

Slope of Indifference Curve and Budget Line at Equilibrium

At equilibrium, the consumer is consuming the bundle of goods that maximizes their utility subject to their budget constraint. This means that the consumer has chosen the bundle of goods where the indifference curve is tangent to the budget line.

At this point, the slope of the indifference curve is equal to the slope of the budget line. This is because the MRS equals the opportunity cost of the two goods, which is the rate at which the consumer can exchange one good for another.

Therefore, the correct answer is option 'A': Equal to the slope of the budget line.