Suppose that a consumer has the utility function $\mathrm { U } = 5 \mathrm {~A} + 7 \mathrm {~B}$. If is measured on the horizontal axis, which of the following is correct?
A) The indifference curves will be L-shaped.
B) The indifference curves will be horizontal.
C) The indifference curves will be straight lines with slope $- 5 / 7$.
D) The indifference curves will be straight lines with slope $- 7 / 5$.

Question

Quizplus · Accepted Answer

The utility function U = 5A + 7B is linear, indicating perfect substitutes. The slope of the indifference curve, which represents the rate at which the consumer is willing to substitute B for A, is given by the negative ratio of the coefficients of A and B, which is -5/7.

Suppose That a Consumer Has the Utility Function U=5 A+7 B\mathrm { U } = 5 \mathrm {~A} + 7 \mathrm {~B}U=5 A+7 B

Suppose That a Consumer Has the Utility Function $\mathrm { U } = 5 \mathrm {~A} + 7 \mathrm {~B}$