Provided the following graph, where units of good 1 are measured on the horizontal axis and units of good 2 are measured on the vertical axis: Units of Good 2 30 28- 26 C 24 22- 20 18- R 16- $u_1 = 30$ Indiff. Curves Budget Line (Line CRNUJ) $u_2 = 60$ $u_3 = 90$ 14- 12 N $u_3 = 90$ 10 8- 6- Z U $u_2 = 60$ $u_1 = 30$ 4- 2- J 0+ 0 10 20 30 40 50 60 70 80 90 100 110 120 Units of Good 1
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The graph shows indifference curves, which represent different combinations of goods 1 and 2 that give the consumer the same level of satisfaction (or utility). The higher the indifference curve, the higher the level of satisfaction. Show more…
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