00:01
So here we've got some tricky questions about the nature of indifference curves, right? so i've sketched an indifference curve, and just as a reminder in indifference curve, is a set of points between two goods, x and y, where the consumer finds all pairs of x and y equally satisfied, right? so a, consumer prefers higher indifference curves that represent greater combinations of goods and services to lower indifference curves.
00:27
A is true.
00:28
Absolutely.
00:30
Higher indifference curve is equal to better off.
00:34
Here, if we give the consumer more, they move up to a higher indifference curve, right? this might be a utility level of 50, whereas this is only a utility level of 40, right? a higher indifference curve indicates you're getting more of both goods, right? so you're getting more of both goods, you are better off.
00:55
The higher indifference curve does indeed make you better off, and vice versa.
00:58
Or lower, right? so b, indifference curve slopes downward because as the quantity of one product is reduced, the quantity other must decrease.
01:07
This is false, right? on an indifference curve, as x goes up, y goes down.
01:15
Along the indifference curves, the goods are not going, they're going in opposite directions.
01:19
They're not going together, right? so this says if one is reduced, the other must also decrease.
01:25
But if you look at this indifference curve, right, as i move down, this indifference curve, you can see that y is decreasing, but x is increasing, right? the indifference curve is reflecting the tradeoff between them, right? which is what c says, true, right? the slope is equal to the tradeoff.
01:47
That is precisely right.
01:49
Remember, every point on the indifference curve is consistent with the same level of utility.
01:54
So when i move down this green line, right, and i give up some y, i'm getting some x...