Question

15) The desire to smooth consumption is reflected in A) the consumer's budget constraint. B) the curvature in a consumer's indifference curves. C) choice between present and future. D) the production possibilities frontier.

Answer 1

Option B

The curvature in a consumer's indifference curves.

Step-by-step explanation:

An indifference curve can be seen as a curve which shows combinations of goods which are equivalent to one another. It is based on the theory that consumers rank consumption bundles by order of preference, and satisfaction drawn from them

The convex nature of the consumer's indifference curves show the inverse relationship in satisfaction derived from two goods which are equivalent to each other.

Consumption can be said to be smoothened out when a consumer attains a point at which he is indifferent towards the choice of goods, mostly because they are equivalent.

The curvature in a consumer's indifference curves can be seen to to smooth consumption of goods.