Shape of an Indifference Curve

Diminishing Marginal Rate of Substitution

An economist is mapping a consumer's preferences for two goods: coffee and croissants. The economist observes that two of the consumer's indifference curves intersect at a single point. Which fundamental assumption about preferences does this intersection directly violate?

Evaluating a Consumer's Preference Statement

Match each core assumption about consumer preferences to its primary implication for the properties of an indifference curve map.

Identifying Preference Inconsistencies

Evaluating the Realism of Preference Assumptions

A consumer reports the following preferences over bundles of goods: they are indifferent between Bundle X and Bundle Y, and also indifferent between Bundle Y and Bundle Z. However, when offered a direct choice between Bundle X and Bundle Z, they strictly prefer Bundle X. This set of preferences is logically consistent with the standard assumptions used to model consumer choice.

Consider a consumer's preferences for two goods, X and Y, represented by a set of indifference curves. Bundle A and Bundle B lie on the same indifference curve. Bundle C contains more of both Good X and Good Y than Bundle A. Based on the standard assumptions about consumer preferences, what can be concluded about the consumer's preference between Bundle B and Bundle C?

Analyzing a Consumer's Willingness to Trade

A consumer is choosing between bundles of two goods: Pizza Slices and Sodas. You are told that the consumer gets the same level of satisfaction from Bundle P (4 pizza slices, 2 sodas) as they do from Bundle Q (2 pizza slices, 5 sodas). Using the standard assumptions about consumer preferences, arrange the following three items in order from MOST preferred to LEAST preferred.

Evaluating a Flawed Indifference Curve

Application of Preference Models to Different Types of Goods