Answer to Question #178155 in Microeconomics for azhar khan

Question

1.      Below are a set of nested indifference curves reflecting consumer preferences between good A and good B. The red curve represents a greater level of utility for consumers than that attained at any point on the blue curve. Which of the graphs is not possible for a field of indifference curves?

Answer 1

A)

B)

C)

Graph c is not possible for a field of indifference curves.

When two indifference curves converge, the concept of transivity of preference is violated. Market utility must be equal at all points on both indifference curves if it is the same at any point on both curves.