Alvin's preferences for good X and good Y are shown in the diagram below. Figure 3.2
-Refer to Figure 3.2. 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
E) both A and C

Question

Alvin's preferences for good X and good Y are shown in the diagram below.  Figure 3.2
-Refer to Figure 3.2. 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 
E) both A and C

Quizplus · Accepted Answer

Alvin's indifference curves violate both the assumption of diminishing marginal rates of substitution (at certain points the curves exhibit increasing marginal rates of substitution) and the assumption that more is preferred to less (as some indifference curves are bowed inward towards the origin, indicating that Alvin would prefer less of both goods to more of one). Therefore, the best choice is E, which includes both A and C as options.

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