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Author Question: Why does an indifference curve slope downward and why is it bowed toward the origin? What will be ... (Read 46 times)

s.tung

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on: Jun 29, 2018
Why does an indifference curve slope downward and why is it bowed toward the origin?
 
  What will be an ideal response?

Question 2

Suppose a decrease in the supply of wheat results in an increase in revenue. This indicates that
 
  A) the demand curve for wheat must be vertical.
  B) the resulting increase in price is proportionately greater than decrease in quantity sold.
  C) the decrease in quantity sold is proportionately larger than the resulting change in price.
  D) the supply curve for wheat must be vertical.


kaylee05

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The downward slope of an indifference curve illustrates the tradeoff between two goods while maintaining the same level of total satisfaction. Since the consumer is indifferent among all points on an indifference curve, when moving along it any increase in satisfaction from gaining one good must be matched by an equal decrease in satisfaction from a loss in the other good. An indifference curve is bowed toward the origin because the more of good x that is consumed the less you are willing to give up of good y to get more of good x and remain indifferent.

Answer to Question 2

B


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