The Figure Given Below Represents Two Indifference Curves I₁ and I₂

question 9

Multiple Choice

The figure given below represents two indifference curves I₁ and I₂ of an individual.Figure 7.2

-Refer to Figure 7.2. Which of the following statements is true?

• A)Point B yields a greater level of satisfaction than point D.
• B)Points A and E yield the same level of satisfaction.
• C)Point B yields a greater level of satisfaction than point C.
• D)I₂ represents a greater level of satisfaction than I₁.
• E)Point C yields a lower level of satisfaction than point D.

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Definitions:

Willingness to Pay

The maximum amount an individual is prepared to spend on a good or service, reflecting the value they assign to it.

Consumer Surplus

The gap between the sum consumers are ready and able to spend on a good or service and what they really pay for it.

Normal Goods

Goods for which demand increases as consumer income rises.

Decrease in Income

A reduction in the amount of money received by an individual or entity, typically measured over a particular period of time.