Answer to Question #139395 in Microeconomics for Isa

Question

If an indifference curve were horizontal(assuming x is measured on the horizontal axis and y along the vertical axis), thiswould mean that the consumer is saturated with
a)good X only b)good Y only c)both good X and Y d)neither good X and Y

Answer 1

a) The consumer with be saturated with good X only

If an indifference curve were to be horizontal parallel to the X-axis which is also horizontal, then the consumer would be saturated with good X only. Ideally, an indifference curve slopes downwards from left to right. This happens when the consumer derives utility rather than disutility from two goods, in this case good X and good Y. What that means is that the consumer is not satiated with either of the two goods. For the consumer to remain at the same or constant level of satisfaction, then as units of one good are given up, more units of the corresponding good must be consumed. Whenever, the indifference curve is horizontal parallel to the X-axis, the consumer is fully satiated with good Y, and there for no units of good Y are given up to consume more good X. In this case, the consumer consumes only units of good X; therefore, the consumer is saturated with good X only.