Economics (AS & A Level) · Oct / Nov 2023 · Paper 32 · Question 2
9708Indifference curves and budget lines
When choosing to buy two products, the satisfaction gained by the consumption of different combinations of these two products can be represented by an indifference curve. Which statement about such an indifference curve diagram is correct?
- AThe range of indifference curves shows the combination of products a consumer can purchase with a given income.
- BIf an indifference curve is a downward-sloping straight line, the principle of diminishing marginal utility must be operating.
- CIndifference curves never cross, because this means that a consumer would be indifferent between combinations of two goods, even when one combination provides more of each good.
- DThe gap between indifference curves is always constant.
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Correct answer: C. Indifference curves never cross, because this means that a consumer would be indifferent between combinations of two goods, even when one combination provides more of each good.
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