If an individual's utility from consuming two goods increases, then there must be
A) a downward rotation of the individual's indifference curve.
B) an inward rotation of the individual's indifference curve.
C) an outward shift of the individual's indifference curve.
D) in inward shift of the individual's indifference curve.

Question

Quizplus · Accepted Answer

When an individual's utility from consuming two goods increases, it means that the individual is better off than before. This can only happen if the individual's indifference curve shifts outward. An inward rotation would imply that the individual is giving up one good to consume more of the other, which would not increase utility. A downward rotation or inward shift would imply that the individual is becoming less satisfied with consuming the two goods, which contradicts the initial assumption that utility is increasing.

If an Individual's Utility from Consuming Two Goods Increases, Then