In using the composite-good convention in an indifference curve diagram,economists
A) compare the prices of market baskets at different points in time.
B) divide the world's production into two classes,goods and services.
C) divide the world's goods into two classes,high quality goods and low quality goods.
D) lump together all goods but one into a single good measured in a single unit,like dollars.

Question

Quizplus · Accepted Answer

The composite-good convention in an indifference curve diagram involves lumping together all goods but one into a single good measured in a single unit, like dollars. This allows economists to simplify the diagram and make it easier to analyze. By doing so, they can focus on the relationship between two goods instead of the complex interaction between all goods in the market.

In Using the Composite-Good Convention in an Indifference Curve Diagram,economists