Indifference curves are downward sloping when:
A) both items are goods.
B) one item is a good and the other item is a bad.
C) we compare risk and return.
D) both items are expensive

Question

Quizplus · Accepted Answer

Indifference curves are downward sloping when both items are goods because the consumer faces a trade-off between the two goods. As the consumer increases the consumption of one good, they must decrease the consumption of the other. This results in a negative slope on the indifference curve. Indifference curves do not apply to comparing risk and return or expensive items. They are also not applicable when one item is a good and the other is a bad because the presence of the bad item would result in a higher indifference curve, rather than a negative slope.

Indifference Curves Are Downward Sloping When