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Chapter 6: 3QQ (page 133)

At two points on an indifference curve,

a. the consumer has the same income.

b. the consumer has the same marginal rate of substitution.

c. the bundle of the goods cost the consumer the same amount.

d. the bundle of goods that yield the consumer same satisfaction.

Short Answer

Expert verified

The correct answer is option d) the bundle of goods that yield the consumer the same satisfaction.

Step by step solution

01

Explanation for the correct option (d)

The indifference curve shows the combination of two sets of commodities that give the same level of satisfaction to the consumers. So the option d is the suitable answer from the options. Along the indifference curve, the consumer has an equal preference over the set of goods.

02

Explanation of incorrect options

Reasons for the incorrect options are as follows:

  • The indifference curve focuses on the satisfaction of the consumer, and it doesn鈥檛 focus on income. So, option 鈥渁鈥� is incorrect.

  • The MRS in an indifference curve will be the slope of the curve at any point. The slope of the indifference curve measures the rate at which a consumer is willing to give up one good for another. It changes along the IC curve. So option 鈥渂鈥� is incorrect.

  • The indifference curve shows the point where the same level of utility or satisfaction is received, not the same cost. So option 鈥渃鈥� is incorrect.

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Most popular questions from this chapter

As a college student you work at a part-time job, but your parents also send you a monthly 鈥渁llowance.鈥� Suppose one month your parents forgot to send the check. Show graphically how your budget constraint is affected. Assuming you only buy normal goods, what would happen to your purchases of goods?

Mr. Burns buys only lobster and chicken. Lobster is a normal good, while chicken is an inferior good. When the price of lobster rises, Mr. Burns buys

  1. less of both goods.

  2. more of lobster and less chicken.

  3. less lobster and more chicken.

  4. less lobster, but the impact on chicken in ambiguous.

Show a consumer鈥檚 budget constraint and indifference curves for wine and cheese. Show the optimal consumption choice. If the price of wine is \(3 per glass and the price of cheese is \)6 per pound, what is the marginal rate of substitution at this optimum?

Is it possible for the total utility to increase while marginal utility diminishes? Explain.

Maude鈥檚 labor-supply curve slopes upward if, for Maude,

  1. leisure is a normal good

  2. consumption is a normal good

  3. the income effect on leisure exceeds the substitution effect.

  4. the substitution effect on leisure exceeds the income effect.
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