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Question 16 1 pts A typical indifference curve is negatively sloped because: as we consume more of one good, we are willing t

Question 18 1 pts Suppose we draw indifference curves with Good A on the x-axis and Good Bon the y-axis, and Good A is a neut

U Question 20 1 pts Refer to the graph below where xy is the consumers Budge Constraint and 11. 12. and I are indifference c

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Answer 16: (a) as we consume more of one good, we are willing to give up the consumption of another good without changing our utility.

Answer 17. (a) is convex to the origin (bowed in )

Answer 18. (b) horizontal

Answer 19. (c) L-shaped

Answer 20. (a) K

Explanation 16: Since indifference curve represents a curve where utility is constant, so when we increase our utility by consuming more of one good, then to keep utility constant, we have to reduce consumption of other good. Thus the curve is downward sloping.

Explanation 17. The indifference curve is convex to origin because of diminishing marginal rate of substitution. This means that as we consume more of one good, we are willing to give up less units of the other good. This is due to the fact that eventually you reach satisfactory levels after consuming too much of a good.

Explanation 18. Since A is neutral good, consuming any number of units of A should not change utility. Only changes in B will change utlity. So the curve is horizontal.

Explanation 19. It is L-shaped because perfect complements have to be used in a fixed ratio. And to increase utility, both the goods should increase by same amount so that the ratio remains same. Like for a pair of shoe, utility will be increased only when more 'pairs' are bought, not when only right or only left shoe is bought.

Explanation 20. Optimal bundle occurs where the indifference curve is tangent to the budget line. This occurs where I2 indifference curve is tangent to budget line xy at the point K.

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