Suppose Arun Consumes Only 2 Goods - Books and CDs

question 120

Multiple Choice

Suppose Arun consumes only 2 goods - books and CDs - and has a set of downward sloping indifference curves.As Arun moves from one point to another on a particular indifference curve,

• A)the combination of books and CDs will vary,but the level of utility remains constant.
• B)the combination of books and CDs that Arun prefers will remain constant,but the level of satisfaction will vary.
• C)the combination of books and CDs and Arun's income level will remain constant.
• D)Arun's level of satisfaction will vary as the combinations of books and CDs varies.
• E)Arun is consuming the same combination of goods,but with varying levels of income.

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Definitions:

Good A

A generic term often used in economics to describe a type of product or commodity.

Budget Line

A graphical representation of all possible combinations of two goods that a consumer can purchase with a given budget at prevailing prices.

Intercepts

Points where a line or curve crosses the axes on a graph, typically used to describe the starting points of equations in coordinate geometry.

Satisfaction Level

A measure of how well goods or services meet or surpass customer expectations.