Final answer:
b. Good Y only
A horizontal indifference curve indicates that the consumer is perfectly saturated with good X only and is indifferent to different amounts of it while utility levels are only affected by changes in good Y.
Step-by-step explanation:
If an indifference curve were horizontal, it would reflect a situation where the consumer does not experience any change in utility from different quantities of good X (on the horizontal axis). In standard indifference curve analysis, a horizontal indifference curve means that increases or decreases in the quantity of the good X do not alter the consumer's satisfaction or utility level; the consumer is perfectly saturated with good X. Hence, changes in the consumption of good Y (on the vertical axis) are the only ones that would affect the consumer's utility. Therefore, the correct option is: b. Good Y only.
Indifference curves are typically downward sloping because they represent the tradeoffs between two goods that a consumer can substitute for each other without changing the overall utility. A horizontal indifference curve is atypical in this sense since it suggests that there is no amount of good Y that could compensate the consumer for a reduction in good X; the consumer is completely indifferent to different amounts of good X. This concept is rooted in the principle of diminishing marginal utility, which is normally reflected by the convex shape of standard indifference curves.