Figure 3.1.3
-If indifference curves cross, then:
A) the assumption of a diminishing marginal rate of substitution is violated.
B) the assumption of transitivity is violated.
C) the assumption of completeness is violated.
D) consumers minimize their satisfaction.
E) all of the above

Question

Figure 3.1.3
-If indifference curves cross, then:
A) the assumption of a diminishing marginal rate of substitution is violated. 
B) the assumption of transitivity is violated. 
C) the assumption of completeness is violated. 
D) consumers minimize their satisfaction. 
E) all of the above

Quizplus · Accepted Answer

If indifference curves cross, it violates the assumption of transitivity, which states that if a consumer prefers bundle A to B and B to C, then they should prefer A to C. Crossing curves imply inconsistent preferences.

Figure 3.1.3 -If Indifference Curves Cross, Then