An indifference curve plotted for two different goods on the axes
A)shifts when real income changes.
B)shows all combinations of the two goods that give the same level of utility.
C)changes its slope as the relative prices of the two goods change.
D)shows the combinations of the two goods that will just use up a consumer's income.
E)shows the different combinations of two goods that the same income can purchase.

Question

Quizplus · Accepted Answer

An indifference curve shows all combinations of two goods that give the same level of utility, meaning the consumer is indifferent between them. The slope of the curve represents the relative marginal utilities of the two goods, which can change with the relative prices of the goods but not with changes in real income. The curve does not show the combinations that will use up a consumer's income or the different combinations that the same income can purchase.

An Indifference Curve Plotted for Two Different Goods on the Axes