The following figure shows the indifference curves (IC) and the budget constraint (BC) of a consumer who needs to decide between the number of trousers and shirts he should purchase.

-Refer to the figure above.In comparison to the bundles on IC₁,the bundles on IC₃ ________.
A) give the same level of utility and are affordable
B) give the same level of utility but are not affordable
C) give a higher level of utility and are affordable
D) give a higher level of utility but are not affordable

Question

The following figure shows the indifference curves (IC) and the budget constraint (BC) of a consumer who needs to decide between the number of trousers and shirts he should purchase.
 
-Refer to the figure above.In comparison to the bundles on IC₁,the bundles on IC₃ ________.
A) give the same level of utility and are affordable 
B) give the same level of utility but are not affordable 
C) give a higher level of utility and are affordable 
D) give a higher level of utility but are not affordable

Quizplus · Accepted Answer

Bundles on IC₃ give a higher level of utility than those on IC₁, but they are not affordable because they lie beyond the consumer's budget constraint.

The Following Figure Shows the Indifference Curves (IC) and the Budget