We have asked Mac to rank his preferences between three market baskets,A,B,and C.If Mac prefers B to C but does not care if he gets A or B,then
A) A is on a higher indifference curve than B.
B) B and C are on the same indifference curve.
C) both A and B are on a higher indifference curve than C.
D) C is on a higher indifference curve than A.
E) B is on a higher indifference curve than C, but it is not possible to determine whether C is on a higher, lower, or the same indifference curve as A.

Question

Quizplus · Accepted Answer

Since Mac prefers B to C, we know that B must be on a higher indifference curve than C. However, since Mac does not care whether he gets A or B, we know that A and B must be on the same indifference curve. Therefore, the only logical conclusion is that both A and B are on a higher indifference curve than C.

We Have Asked Mac to Rank His Preferences Between Three