If Two Bundles Are on the Same Indifference Curve,then

question 29

Multiple Choice

If two bundles are on the same indifference curve,then

• A) the consumer derives the same level of utility from each.
• B) the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility.
• C) no comparison can be made between the two bundles since utility cannot really be measured.
• D) B and C.

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Definitions:

Negative Income Tax

A welfare system that provides income support by offering a direct transfer of funds to individuals whose income falls below a certain threshold.

Tax Revenue

The revenue that governments acquire from taxes.

Capitalism

An economic system characterized by private ownership of the means of production, where investments, production, distribution, income, and prices are determined mainly by competition in a free market.

Socialism

An economic and political system where the means of production, distribution, and exchange are owned or regulated by the community as a whole.