Figure: Kiwi and Nuts Refer to figure. Which statement is TRUE for this figure? A) Indifference curve U₁ provides higher utility than indifference curve U₂. B) Bundle A is preferred to bundle B. C) Bundle C is preferred to bundle D. D) Bundle D is preferred to bundle A.

Question

Quizplus · Accepted Answer

This figure represents a typical indifference curve diagram where the consumer is choosing between two goods, kiwi and nuts. The indifference curves represent the combinations of kiwi and nuts that provide equal levels of utility. The higher the indifference curve, the higher the level of utility. To determine the best choice, we need to look for the bundle that gives the highest level of utility. Bundle C lies on a higher indifference curve than bundle D, which means it provides a higher level of utility. Therefore, bundle C is preferred to bundle D. We cannot compare bundle A and B or indifference curve U₁ and indifference curve U₂ because both bundles lie on the same indifference curve. To compare between them, we need to move to a higher indifference curve. Therefore, we cannot say bundle A is preferred to bundle B nor indifference curve U₁ provides higher utility than indifference curve U₂.

Figure: Kiwi and Nuts Refer to Figure