Two individuals, Alex and Ben, are choosing between combinations of apples and oranges. Their preferences are represented by indifference curves. Although the shapes of their indifference curves are identical, the utility levels assigned to them are different. For Alex, three of his curves are labeled U=10, U=20, and U=30. For Ben, the corresponding, identically-shaped curves are labeled U=5, U=100, and U=1000. Based on this information, what can be concluded about their preferences?

Evaluating a Consumer Model

A consumer's preferences are represented by an indifference map where three curves are assigned utility values of 10, 20, and 30. If an economist relabels these same curves with utility values of 5, 6, and 100, respectively, this change fundamentally alters the consumer's ranking of the bundles on these curves.

Interpreting Utility Values

Match each concept related to the measurement of consumer satisfaction with its correct description.

Sufficiency of Ordinal Utility

An economist is studying a consumer's choices between two goods. The consumer's indifference map shows that Bundle X is on a curve labeled with a utility value of 25, and Bundle Y is on a curve labeled with a utility value of 75. Based solely on this information, what is the most accurate conclusion the economist can draw?

Comparing Utility Functions

An economist models a consumer's preferences for pizza (P) and soda (S) using the utility function U(P, S) = P × S. The consumer is considering two bundles: Bundle A consists of 2 slices of pizza and 3 cans of soda. Bundle B consists of 3 slices of pizza and 4 cans of soda. Based on this model, what is the only conclusion that can be drawn with certainty?

Evaluating Competing Consumer Preference Models

Interpreting Utility Values