A consumer allocates all income between two products, A and B. If, on an indifference map, the equilibrium position shifts onto a higher indifference curve, then
A) the consumer must be purchasing more of both products.
B) the relative prices of A and B must have changed.
C) the prices of A and B must have increased.
D) total utility must have increased.

Question

A consumer allocates all income between two products, A and B. If, on an indifference map, the equilibrium position shifts onto a higher indifference curve, then
A) the consumer must be purchasing more of both products.
B) the relative prices of A and B must have changed.
C) the prices of A and B must have increased.
D)  total utility must have increased.

Quizplus · Accepted Answer

When the equilibrium position shifts to a higher indifference curve, it indicates that the consumer is achieving a higher level of satisfaction or utility, as higher indifference curves represent higher utility levels.

A Consumer Allocates All Income Between Two Products, a and B