All combinations on an indifference curve are equally acceptable to the consumer, however not all combinations are affordable. False, all combinations are always affordable for every indifference curve. False, only one combination is affordable on every indifference curve. True, all indifference curves are equally good choices if they are affordable. True, they can only afford the combinations that fall within the budget set.
All combinations on an indifference curve are equally acceptable to the consumer, however not all combinations are affordable. False, all combinations are always affordable for every indifference curve. False, only one combination is affordable on every indifference curve. True, all indifference curves are equally good choices if they are affordable. True, they can only afford the combinations that fall within the budget set.
Chapter10: Consumer Choice Theory
Section: Chapter Questions
Problem 1P
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Transcribed Image Text:**Explanation of Indifference Curves and Affordability**
Indifference curves represent different combinations of goods between which a consumer is indifferent, meaning they derive the same level of satisfaction from each combination. However, not all these combinations are necessarily within the consumer's budget. The consumer aims to achieve the highest possible satisfaction while staying within their budget constraints.
**Question:**
All combinations on an indifference curve are equally acceptable to the consumer, however not all combinations are affordable.
**Options:**
- False, all combinations are always affordable for every indifference curve.
- False, only one combination is affordable on every indifference curve.
- True, all indifference curves are equally good choices if they are affordable.
- True, they can only afford the combinations that fall within the budget set.
**Explanation:**
- The correct interpretation is that while all points on an indifference curve provide the same utility, only those within the consumer's budget are realistically achievable. Therefore, consumers can only choose the combinations on the indifference curve that are within their budget set.
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