You Are Given the Following Two Possible Community Indifference Curve

question 19

Multiple Choice

You are given the following two possible community indifference curve maps for a country, where curves S₁ and S'₁ pertain to income distribution #1 and curves S₂ and S'₂ pertain to income distribution #2.

The differing shapes of the curves in these two maps could reflect the fact that in income distribution #2, in comparison with income distribution #1, a greater share of total income is held by individuals who value __________. In addition, in this diagram, point B is preferred to point A __________.

• A) good X relatively more highly than good Y; on the basis of income distribution #2 but not on the basis of income distribution #1
• B) good X relatively more highly than good Y; on the basis of income distribution #1 but not on the basis of income distribution #2
• C) good Y relatively more highly than good X; on the basis of income distribution #2 but not on the basis of income distribution #1
• D) good Y relatively more highly than good X; on the basis of income distribution #1 but not on the basis of income distribution #2

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Definitions:

Tariff

A tax imposed by a government on goods and services imported from other countries, used to control trade.

Restrictions

Rules or limitations placed on activities, movements, or trade to control or regulate actions.

World Price

The international market price at which goods are traded between countries; it plays a crucial role in determining local prices and trade policies.

Exported

Goods or services sent from one country to another for sale or trade.