Question

3. An indifference curve is a. the set of all points of consumer equilibrium as the consumer's income changes. b. all combinations of goods X and Y that yield the same total utility. c. all combinations of goods X and Y that yield the same marginal utility. d. the set of all goods that the consumer can afford given her income and the prices of the goods. 4. Which of the following is NOT a property of an indifference curve? a. An indifference curve is convex (bowed in) to the origin. b. The marginal rate of substitution diminishes as you move down the indifference curve. c. The consumer is indifferent between any two points on an indifference curve.

Answer 1

3. b. all combinations of goods X and Y that yield the same total utility.

On the indifference curve line, the consumer consumer different combinations of the two goods that give him equal level of satisfaction and utility.

4. d. As you move from one indifference curve to another indifference curve closer to the origin, utility increases.

As we go from one indifference curve to another to the right of the origin the consumers utility increases. Since then the consumer is able to consumer greater amounts of both the goods and gain higher utility. Every rational consumer prefers more to less.