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Microeconomics Question from Walter E. Williams:[]

"What does it mean if an indifference curve between goods X and Y (a) becomes parallel to the X axis, (b) is positively sloped and has higher indifference curves to its right, (c) is positively sloped and has higher indifference curves to its left, (d) is negatively sloped and has higher indifference curves to its left?"

Answer[]

Preference

Preferences. Highest Utility is measured in the center.

  • (a)-In this case any more of good X and one would be willing to give up good Y to reduce the endowment of good X
  • (b)-Getting rid of good Y makes this person better off, Getting more of Good X is still a utility improving move.
  • (c)-Good Y is utility improving, more of good X makes this individual worse off.
  • (d)-Both x and y are "bad" goods. More of either will decrease utility.




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