Alvin's preferences for good X and good Y are shown in the diagram below. Figure 3.1
-Refer to Figure 3.1. Which assumption concerning preferences do Alvin's indifference curves violate?
A) Diminishing marginal rates of substitution
B) Transitivity of preferences
C) More is preferred to less
D) Completeness

Question

Alvin's preferences for good X and good Y are shown in the diagram below.  Figure 3.1
-Refer to Figure 3.1. Which assumption concerning preferences do Alvin's indifference curves violate?
A) Diminishing marginal rates of substitution 
B) Transitivity of preferences 
C) More is preferred to less 
D) Completeness

Quizplus · Accepted Answer

Alvin's indifference curves violate the assumption of diminishing marginal rates of substitution, which means that as the consumer moves along the curve and gives up more of one good, they must receive an increasing amount of the other good to remain indifferent. However, in Alvin's diagram, the indifference curves are convex, indicating that the marginal rate of substitution is increasing as the consumer moves down and to the right along the curve. Therefore, the best choice is A.

Alvin's Preferences for Good X and Good Y Are Shown