Alvin's preferences for good X and good Y are shown in the diagram below. Figure 3.1
-Based on Figure 3.1, it can be inferred that:
A) Alvin does not consider good X as "good."
B) Alvin will never purchase any of good Y.
C) Alvin regards good X and good Y as perfect substitutes.
D) Alvin regards good X and good Y as perfect complements.
E) none of the above

Question

Alvin's preferences for good X and good Y are shown in the diagram below.  Figure 3.1
-Based on Figure 3.1, it can be inferred that:
A) Alvin does not consider good X as "good." 
B) Alvin will never purchase any of good Y. 
C) Alvin regards good X and good Y as perfect substitutes. 
D) Alvin regards good X and good Y as perfect complements. 
E) none of the above

Quizplus · Accepted Answer

In Figure 3.1, Alvin's indifference curve is a straight line, indicating that he regards good X and good Y as perfect substitutes. This means that he is willing to trade one good for the other at a constant rate, and the specific amounts of each do not matter as long as the total utility (satisfaction) remains the same. The other choices can be ruled out because they do not accurately reflect Alvin's preferences shown in the diagram.

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