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Which of the following is true about indifference curves?
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18. Consumer Choice and Behavioral Economics
Indifference Curves
Multiple Choice
Why do indifference curves generally slope downward?
A
Because to keep utility constant, an increase in one good must be compensated by a decrease in the other (a negative marginal rate of substitution).
B
Because most goods are perfect substitutes or complements, which causes indifference curves to slope downward.
C
Because budget constraints prevent consumers from buying more of both goods, so the curve slopes downward.
D
Because consumers always prefer more of both goods, so indifference curves slope downward to reflect increasing satisfaction.
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