If Smith will give up three units of Y to get one additional unit of X, then
A)he has transitive preferences.
B)his budget constraint is upward sloping.
C)his indifference curve is downward sloping.
D)the price of X must be three times as high as the price of Y.

Question

Quizplus · Accepted Answer

The fact that Smith is willing to give up three units of Y to get one additional unit of X implies that he values X more highly than Y. This means that his indifference curves must be downward sloping, as he is willing to trade away increasingly large amounts of Y in order to obtain additional units of X.

If Smith Will Give Up Three Units of Y to Get