Indifference Curve Analysis

question 70

Multiple Choice

Indifference curve analysis

• A) presumes, as does utility analysis, that satisfaction is numerically measurable.
• B) presumes, unlike utility analysis, that satisfaction is numerically measurable.
• C) presumes only that the consumer can say one combination of two goods yields more or less utility than some other combination.
• D) is in conflict with the idea of a downsloping demand curve.

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Definitions:

Isoquant

Curve showing all possible combinations of inputs that yield the same output.

Minimum Cost

The lowest possible expenditure to produce a given quantity of goods or services.

Expansion Path

Curve passing through points of tangency between a firm’s isocost lines and its isoquants.

Long Run

A period in which all factors of production and costs are variable, allowing all inputs to be adjusted.