Asked by Melissa Washburn on May 31, 2024
Verified
A consumer allocates all income between two products, A and B. If, on an indifference map, the equilibrium position shifts onto a higher indifference curve, then
A) the consumer must be purchasing more of both products.
B) the relative prices of A and B must have changed.
C) the prices of A and B must have increased.
D) total utility must have increased.
Indifference Curve
A graph representing combinations of two goods between which a consumer is indifferent, showing preferences and trade-offs.
Total Utility
The total satisfaction received from consuming a certain amount of a good or service.
Equilibrium Position
A situation where the supply and demand in the market are equal, leading to stable prices.
- Grasp the effect of changes in income and prices on consumer equilibrium.
- Analyze the impact of changes in utility on consumption choices.
Verified Answer
ZW
Zachary WrightJun 06, 2024
Final Answer :
D
Explanation :
Moving to a higher indifference curve indicates an increase in total utility, as each curve represents a level of utility, with higher curves indicating higher levels of satisfaction.
Learning Objectives
- Grasp the effect of changes in income and prices on consumer equilibrium.
- Analyze the impact of changes in utility on consumption choices.
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