A consumer always gives up 2 units of good 2 for 1 more unit of good 1, whatever he has. His indifference curves are

convex curves with a falling MRSCorrect answerYour answerconcave curvesCorrect answerYour answerstraight lines with a constant MRS of 2Correct answerYour answervertical linesCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

A constant MRS means a constant slope: the indifference curve is a straight line.
This happens when the two goods are perfect substitutes for him.

Concept: Perfect substitutes
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsIndifference curves and MRS

Practise this chapter →

Ten questions from Budget Line & Optimal Choice, at your own pace.

Practise this chapter →

Ten questions from Budget Line & Optimal Choice, at your own pace.

Practise this chapter All 67 questions in Budget Line & Optimal Choice Revise the notes for Budget Line & Optimal Choice

A consumer always gives up 2 units of good 2 for 1 more unit of good 1, whatever he has. His indifference curves are

Explanation