What is an indifference curve? Why can indifference curves never cross?
What will be an ideal response?
An indifference curve shows the combination of consumption bundles that give the consumer the same utility. Indifference curves never cross because we assume consumers have transitive preferences. If a consumer prefers consumption bundle A to consumption bundle B, and he prefers consumption bundle B to consumption bundle C, then he must prefer bundle A to bundle C. If indifference curves cross, this assumption is violated.
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Refer to Goods X and Y. If the indifference curves are downward sloping straight lines (rather than convex curves), then we can conclude that
Assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions. a. X does not affect the individual’s utility. b. Y does not affect the individual’s utility. c. both X and Y affect the individual’s utility. d. neither good affects the individual’s utility.
The unemployment rate for blacks is generally ___ the unemployment rate experienced by whites.
Fill in the blank(s) with the appropriate word(s).