Asked by Nurul Ainaa on Jun 15, 2024
Verified
To derive the demand curve of a product in indifference curve analysis, the
A) budget line is assumed to stay in a fixed position.
B) money income of the consumer is assumed to be variable.
C) prices of both products are assumed to be variable.
D) tastes and preferences of the consumer are assumed to be fixed.
Indifference Curve Analysis
A graphical representation used in microeconomics to show combinations of two goods that provide the consumer with equal levels of utility.
Demand Curve
A graphical representation showing how the quantity demanded of a commodity changes with changes in its price, typically depicting an inverse relationship.
Budget Line
A graphical representation showing the combination of goods a consumer can purchase with a given income.
- Infer and comprehend the consequences of individual demand curves stemming from budget constraints and indifference curves.
- Comprehend the linkage among indifference curves, budget constraints, and the state of consumer balance.
Verified Answer
SK
Sameh KuleibJun 17, 2024
Final Answer :
D
Explanation :
In indifference curve analysis, to derive the demand curve of a product, the tastes and preferences of the consumer are assumed to be fixed. This assumption allows the analysis to focus on the effects of changes in prices and income on the quantity demanded, without the complicating factor of changing tastes or preferences.
Learning Objectives
- Infer and comprehend the consequences of individual demand curves stemming from budget constraints and indifference curves.
- Comprehend the linkage among indifference curves, budget constraints, and the state of consumer balance.