A consumer’s set of indifference curvesprovides complete ranking of all possible
ID: 1255007 • Letter: A
Question
A consumer’s set of indifference curvesprovides
complete ranking of all possible consumptionbundles
ranking of the set of bundles that happen to fall onindifference curves
framework for evaluating market equilibrium
relative ranking of bundles that provide more of allgoods
If indifference curves could cross, it would suggestthat
it is possible to demonstrate that all standard properties ofindifference curves are typically satisfied
consumers are likely to prefer a redistribution of income fromrich to poor
it is possible to demonstrate that a consumer does not prefermore to less
it facilitates the explanation of differences in consumptionchoices across individuals
When indifference curves are bowed in and towardthe origin,
people are less inclined to trade away goods that they have anabundance of
people can only increase satisfaction by consuming more of allcommodities
it is unlikely that consumers will be willing to engage intrade
the marginal rate of substitution decreases as a consumer movesdown an indifference curve
The highest indifference curve that a consumer can reachis
the one farthest from the origin
the one that is tangent to the budget constraint
the one that intersects the budget constraint in at least twoplaces
all of the above
When the indifference curve is tangent to the budgetconstraint,
the consumer is likely to be at a sub-optimal level ofconsumption
indifference curves are likely to intersect
a consumer cannot be made better off without increasing herincome
income is at its maximum for a consumer
Assume that a college student purchases only Coke andSnickers. If Coke is an inferior good and Snickers are normalgoods, the income-effect associated with an increase in the priceof a Snickers will result in
an increase in the consumption of Snickers, and an increase inthe consumption of Coke
an increase in the consumption of Snickers, and a decrease inthe consumption of Coke
a decrease in the consumption of Snickers, and an decrease inthe consumption of Coke
a decrease in the consumption of Snickers, and a increase in theconsumption of Coke
Explanation / Answer
A consumer’s set of indifference curvesprovides complete ranking of all possible
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