Toby Talkalot subscribes to a local phone service that charges a fixed fee of $10 per month and allows him to place as many local phone calls as he likes without further charge. Let good 1 be an aggregate of commodities other than local phone use and let good 2 be local phone use. (Measure good 1 on the horizontal axis and good 2 on the vertical axis.) On Monday, Toby didn't use the telephone at all. The slope m of his indifference curve at the consumption bundle he chose on Monday was
A) positive.
B) less than or equal to 0.
C)0.
D) greater than or equal to 0.
E) negative.

Question

Quizplus · Accepted Answer

Since Toby did not use the telephone at all on Monday, he consumed only good 1. Therefore, he is indifferent between different combinations of good 1 that cost him $10. Since the price of good 2 (local phone use) is already zero, the slope of his indifference curve is zero.

Toby Talkalot Subscribes to a Local Phone Service That Charges