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Question : Statement 1: Indifference curves represent different combinations of goods that give the consumer the same level of satisfaction.

Statement 2: The consumer chooses the consumption bundle that lies on the highest attainable indifference curve.

Option 1: Statement 1 is true, and statement 2 is false.

Option 2: Statement 1 is false, and statement 2 is true.

Option 3: Both statement 1 and statement 2 are true.

Option 4: Both statement 1 and statement 2 are false.


Team Careers360 18th Jan, 2024
Answer (1)
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Team Careers360 23rd Jan, 2024

Correct Answer: Both statement 1 and statement 2 are true.


Solution : c) Option C: Both statement 1 and statement 2 are true.

Statement 1 is true. Indifference curves represent different combinations of goods that give the consumer the same level of satisfaction. Points on an indifference curve represent bundles of goods that provide the consumer with equal utility or satisfaction.

Statement 2 is also true. The consumer chooses the consumption bundle that lies on the highest attainable indifference curve. This is because the consumer aims to maximize their utility or satisfaction, and the highest attainable indifference curve represents the highest level of utility the consumer can achieve given their budget constraint and the prices of goods.

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