Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 21 - Part VII - The Theory of Consumer Choice - Questions for Review - Page 457: 2

Answer

Please see the graph.

Work Step by Step

People usually prefer to consume more goods, so higher indifference curves are preferred to lower indifference curves. Indifference curves slope downward. This happens since, at some point, consumers want to consume a second good (and will trade away from good A to consume more of good B). Indifference curves don't cross since consumers prefer to consume more goods. (If two indifference curves cross, then there is a point where the consumer consumes fewer goods.) Indifference curves are bowed inward since consumers are willing to trade away goods where they have a surplus for goods where they are lacking.
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