Good XВIC2• EICCGood YMoving from B to D, the person is givingup Good X and getting Good Y.Whether the person prefers B over Ddepends on whether he values the extraY more than the X he loses.D must be on a lower indifference curvethan B.B is preferred to D.Any bundle of goods on IC2 is preferredover any bundle of goods on IC1.If a person moves from a bundle on IC1to a bundle on IC2 he is happier.

Take each option one by one.. ● YES, the moving from B to D, person is giving up the X to get the…

Answered: Good X D. IC2 IC • E C Good Y Moving…

Good X D. IC2 IC • E C Good Y Moving from B to D, the person is giving up Good X and getting Good Y. Whether the person prefers B over D depends on whether he values the extra B.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.4P

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Question

Good X
В
IC2
• E
IC
C
Good Y
Moving from B to D, the person is giving
up Good X and getting Good Y.
Whether the person prefers B over D
depends on whether he values the extra
Y more than the X he loses.
D must be on a lower indifference curve
than B.
B is preferred to D.
Any bundle of goods on IC2 is preferred
over any bundle of goods on IC1.
If a person moves from a bundle on IC1
to a bundle on IC2 he is happier.

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