Every indifference curve shows combinations of first-period and second-period consumption that:
A) are tangent to the intertemporal budget constraint.
B) have equal income and substitution effects.
C) are available to the consumer.
D) make the consumer equally happy.

Question

Quizplus · Accepted Answer

Indifference curves are a graphical representation of the consumer's preferences, and each curve shows combinations of the two periods' consumption that yield equal levels of satisfaction. Therefore, the correct answer is D, as all points on the same indifference curve are equally preferred by the consumer. Choices A, B, and C are not accurate, as they do not describe the purpose or meaning of indifference curves.

Every Indifference Curve Shows Combinations of First-Period and Second-Period Consumption