Learn Before
Applying the 'More is Better' Principle to Work-Leisure Bundles
The Indifference Map
Higher Indifference Curves Represent Higher Utility
An indifference map ranks different levels of satisfaction, where curves located further from the origin correspond to higher utility. For example, in the map of Karim's preferences (Figure 3.4), the indifference curve passing through bundle A represents a higher level of utility than the curve passing through B, while the curve through C provides the lowest utility of the three. This ranking allows for the comparison of satisfaction levels between different curves.
0
1
Tags
Science
Economy
CORE Econ
Social Science
Empirical Science
Economics
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.3 Doing the best you can: Scarcity, wellbeing, and working hours - The Economy 2.0 Microeconomics @ CORE Econ
Related
Higher Indifference Curves Represent Higher Utility
Karim's Indifference Map
Comparing Utility of Points On and Off an Indifference Curve
Indifference Map for Free Time vs. Final Grade
Limitation of Indifference Maps: Incomplete Preference Ranking
Consider a standard indifference map showing a consumer's preferences for two goods. The map displays two specific indifference curves, I₁ and I₂. Any bundle of goods on curve I₂ provides the consumer with a higher level of satisfaction than any bundle on curve I₁. Point A lies on curve I₁. Point B lies on curve I₂. Points C and D are two distinct bundles both located in the unlabeled space between curves I₁ and I₂. Based solely on this information, which of the following statements about the consumer's preferences must be true?
Evaluating Preferences with an Incomplete Map
A consumer's preferences for two goods are represented by an indifference map. The map shows two specific indifference curves, IC₁ and IC₂. Any bundle of goods on curve IC₂ provides a higher level of satisfaction than any bundle on curve IC₁. Bundles A and B both lie on curve IC₁. Bundle C lies on curve IC₂. Which of the following statements accurately synthesizes the consumer's preferences?
Consider a diagram showing a consumer's preferences with two indifference curves, Curve A and Curve B, where Curve B represents a higher level of satisfaction than Curve A. If two distinct consumption bundles, X and Y, are both located in the physical space on the graph between Curve A and Curve B, it is always possible to determine which bundle the consumer prefers without any additional information.
Analyzing the Limitations of an Indifference Map
Evaluating the Indifference Map as a Model of Preference
An indifference map shows a consumer's preferences for two goods. The map has two curves, IC₁ and IC₂, where any bundle on IC₂ is preferred to any bundle on IC₁. Points A and B are on IC₁. Point C is on IC₂. Points D and E are two distinct bundles located in the space between IC₁ and IC₂. Match each comparison of points with the correct statement about the consumer's preference.
While an indifference map effectively illustrates that bundles on higher curves are preferred to those on lower curves, it fails to provide a complete ranking of all possible bundles. This is because a standard map does not allow for a direct preference comparison between two distinct bundles located in the space between the explicitly drawn curves. Therefore, an indifference map is said to provide only a(n) _________ ranking of preferences.
Consumer Choice Scenario
Evaluating a Claim about Preferences
Ranking Preferences vs. Measuring Exact Utility
Higher Indifference Curves Represent Higher Utility
Learn After
Graphical Example Comparing Utility of Two Consumption-Leisure Bundles