Smoothness of indifference curve means
X and Y are substitutes of each other
X and Y can be consumed in fixed proportion
Perfect divisibility of two goods
Perfect non divisibility of two goods
When MRS is constant x and y are :
Not related
Perfect Substitutes
Perfect Complements
Inferior Goods
Which of the following statements is NOT true of indifference curves?
They exhibit higher levels of utility as you move from the origin
They are convex to the origin
They are downward sloping
They could intersect
The formula of marginal utility is
MUn - 1 - MU1
TUn - TUn - 1
TU/MU
TU × MU
Upward sloping demand curve can be explained by:
Marginal utility theory
Diminishing marginal utility
Indifference curve theory
Consumer theory
Imagine a budget constraint between good y on the vertical axis and good x on the horizontal. If that budget line were to become more shallow it could be due to:
An increase in the price of good x
A change in consumer preference towards good x
An increase in the price of both goods, yet with the price of ' good y ' increasing more than that of good x
An increase in income
Diminishing MRS means :
Consumer wants to give up lesser units of y in exchange for good x
Consumer wants to give up more units of y in exchange for good x
Consumer wants to give up same unit of y in exchange for good x
Consumer wants to give up more units of x in exchange for good y
Decreasing slope of indifference curve is explained by
Law of diminishing marginal returns
Law of diminishing MRS
Law of demand
Law of constant MRS
Indifference mean:
x is preferred to y
y is preferred to x
x and y are equally preferred
x is not preferred
