An indifference curve is best defined as
A)the level of consumption where a consumer is indifferent to receiving more consumption.
B)a boundary line defining production possibilities.
C)the set of all bundles that the consumer enjoys equally well.
D)a boundary line between attainable and unattainable choices.
E)a concave curve that ranks preferred consumption bundles.

Question

Quizplus · Accepted Answer

An indifference curve represents the combinations of goods or services that give a consumer the same level of satisfaction or utility. Therefore, the set of all bundles that the consumer enjoys equally well is the best definition for an indifference curve. Choice A is incorrect because an indifference curve does not necessarily represent a level of consumption where a consumer is indifferent to receiving more consumption. Choice B is incorrect because a boundary line defining production possibilities refers to a production possibilities frontier. Choice D is incorrect because a boundary line between attainable and unattainable choices refers to a budget constraint or feasibility line. Choice E is incorrect because a concave curve that ranks preferred consumption bundles could refer to an indifference curve or an isoquant, depending on the context.

An Indifference Curve Is Best Defined as