The following figure shows the indifference curves U 1 and U 2 of a consumer choosing between hours devoted at a tennis club and other goods.All consumers in this market have identical demand curves.IZ is the original budget line of a representative consumer,which shifts to AB when the club begins to charge an entry fee.
Figure 12-3
-Refer to Figure 12-3.The price of a court hour to the consumer,in terms of other goods,is:
A)OI/OZ.
B)OI/BZ.
C)OI/OB.
D)AI/BZ.

Question

The following figure shows the indifference curves U 1 and U 2 of a consumer choosing between hours devoted at a tennis club and other goods.All consumers in this market have identical demand curves.IZ is the original budget line of a representative consumer,which shifts to AB when the club begins to charge an entry fee.
Figure 12-3 
-Refer to Figure 12-3.The price of a court hour to the consumer,in terms of other goods,is:
A)OI/OZ. 
B)OI/BZ. 
C)OI/OB. 
D)AI/BZ.

Quizplus · Accepted Answer

The price of a court hour to the consumer, in terms of other goods, is represented by the ratio OI/OZ, where OI is the price of the court hour and OZ is the price of other goods.

The Following Figure Shows the Indifference Curves U1 and U2

The Following Figure Shows the Indifference Curves U₁ and U₂