Figure 3.4.1
-Refer to Figure 3.4.1 above. The consumer chooses A on budget line I1 and B on budget line I2. Which of the following statements is NOT true?
A) B is preferred to C.
B) A is preferred to B.
C) C is preferred to A.
D) All of the statements are correct.

Question

Figure 3.4.1
-Refer to Figure 3.4.1 above. The consumer chooses A on budget line I1 and B on budget line I2. Which of the following statements is NOT true?
A) B is preferred to C. 
B) A is preferred to B. 
C) C is preferred to A. 
D) All of the statements are correct.

Quizplus · Accepted Answer

If the consumer chooses A on budget line I1 and B on budget line I2, it means that A and B are on the same indifference curve and both options are affordable. Therefore, the consumer is indifferent between A and B. As a result, statement B cannot be true because A and B are equally preferred.

Figure 3.4.1 -Refer to Figure 3.4.1 Above. the Consumer Chooses a on a on Budget