The indifference curve in the diagram yields Juan 100 units of utility. If Juan's money income were to increase by 20 percent, the indifference curve would
A) shift leftward.
B) shift rightward.
C) become steeper.
D) not be affected.

Question

The indifference curve in the diagram yields Juan 100 units of utility. If Juan's money income were to increase by 20 percent, the indifference curve would 
A) shift leftward. 
B) shift rightward. 
C) become steeper. 
D) not be affected.

Quizplus · Accepted Answer

An increase in Juan's money income would not affect his level of utility or the shape/position of his indifference curve since the increase in income does not change his preferences or the relative prices of the goods. Thus, the indifference curve remains the same, and the answer is D.

The Indifference Curve in the Diagram Yields Juan 100 Units