1. If a consumer’s indifference curve was upward sloping, this would tell us: Th
ID: 1219851 • Letter: 1
Question
1. If a consumer’s indifference curve was upward sloping, this would tell us:
The consumer always prefers a bundle of goods that has more of both goods.
We cannot tell anything
The consumer is indifferent between two bundles of goods in which one bundle has more of both goods.
The consumer never prefers a bundle of goods that has more of both goods.
2. Can the budget constraint (line) appear the same for two people that have different preferences?
No. Each person’s preferences are subjective and may differ radically form another.
Yes. Even though they have different preferences, the indifference curves will look the same which causes the budget lines to look the same.
No. Because of diminishing marginal utility the budget lines must bow inward toward the origin.
Yes. Preferences do not affect the budget line.
a.The consumer always prefers a bundle of goods that has more of both goods.
b.We cannot tell anything
c.The consumer is indifferent between two bundles of goods in which one bundle has more of both goods.
d.The consumer never prefers a bundle of goods that has more of both goods.
Explanation / Answer
Ans 1
The consumer never prefers a bundle of goods that has more of both goods.
When a set of indifference curves is upward sloping, it means one of the goods is a “bad” so that the consumer prefers less of that good rather than more. The positive slope means that the consumer will accept more of the bad only if he also receives more of the other good in return
2.
Yes. Preferences do not affect the budget line.
d.The consumer never prefers a bundle of goods that has more of both goods.
When a set of indifference curves is upward sloping, it means one of the goods is a “bad” so that the consumer prefers less of that good rather than more. The positive slope means that the consumer will accept more of the bad only if he also receives more of the other good in return
2.
d.Yes. Preferences do not affect the budget line.
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