Question

Which of the following statements is false?

a. Consumption bundles that lie on higher indifference curves yield higher utility.
b. A consumer is indifferent among all consumption bundles along a given budget line.
c. There is an indifference curve associated with any combination of goods selected by a consumer.
d. All consumption bundles along a given indifference curve are equally desirable.

Answer 1

Answer: The following statement is false: A consumer is indifferent among all consumption bundles along a given budget line.

Reason: A consumer is not indifferent among all consumption bundles along a given budget line since different consumption bundles yield different utility and thus do differ in preference as well.

Let's assume a budget line: px +py ≤ m

Now, let's consider two different consumption bundle A(
`x_(1)`,
`y_(1)`) and B(
`x_(2)`,
`y_(2)`)

We can plot them on a graph and compare the difference in regards with the above answer.

Both of these consumption good might be on the budget line but will lie on different indifference curves and thus will yield different utility.