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The graph below shows indifference curves for product X and Y.
Which indifference curve provides the highest level of happiness or satisfaction?
Green curve
Recall that higher indifference curves represent a greater level of utility than lower ones.
Suppose that the consumer is spending all of her income and is consuming at point A.
What should the consumer do in order to maximize her happiness?
Recall that the highest achievable indifference curve touches the budget constraint at a single point of tangency. Where would that point be? In order to get to that point, how should the consumer change her current buying habbits?
If the consumer spends all her income and tries to maximize her utility, which utility curve will she end up on?
Blue
Recall that the highest achievable indifference curve touches the budget constraint at a single point of tangency.
Box 1: Select the best answer
Box 2: Select the best answer
Box 3: Select the best answer