Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter B, Problem 1RQ
Exercise B1
What point is preferred along an indifference Curve?
Expert Solution & Answer
To determine
To find:
The point preferred in an indifference curve.
Explanation of Solution
All the points on an indifference curve give the same level of utility or satisfaction to the consumer and each point shows the combination of two goods. A consumer will be in equilibrium at a point where his budget line is tangent to the indifference curve. At this point, the slope of the indifference curve and slope of the budget line is the same. Any point above or outside indifference curve are not affordable for the consumer’s budget. While any point below the indifference curve is inferior to his approach.
So, the consumer will prefer a point on the indifference curve which is tangent to the budget line.
Economics Concept Introduction
Indifference Curve: This is a curve which represents all the possible combinations of two commodities which provides equal satisfaction to the consumer. The consumer has no reason to prefer one combination to any other combination on the same curve. So, this curve is the indifference curve.
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Chapter B Solutions
Principles of Economics 2e
Ch. B - Exercise B1 What point is preferred along an...Ch. B - Exercise B2 Why do indifference curves slope down?Ch. B - Exercise B3 Why are indifference curves sleep on...Ch. B - Exercise B4 How many indifference curves does a...Ch. B - Exercise B5 How can you tell which indifference...Ch. B - Exercise B6 What is a substitution effect?Ch. B - Exercise B7 What is an income effect?Ch. B - Exercise B8 Does the income effect involve a...Ch. B - Exercise B9 Does a change in price both an income...Ch. B - Exercise B10 Would you expect, in some cases, to...
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