Consumer Equilibrium: The consumer reaches equilibrium at the point where the budget line is tangent on the indifference curve.
T’ is the point of equilibrium as budget line AB is tangent on indifference curve IC3 the upper most IC which implies maximum possible level of satisfaction.
At equilibrium point, the slope of IC referes to MRSxy and the slope of BL (Budget Line) refers to ratio of price of x to price of y.
i.e., Px/Py, Therefore MRSxy = Px/Py
