4. The indifference curve between a good and garbage is positively sloped. True or false? Explain.

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Expert Solution

Answer 4

This Statement is True

Indifference curve shows the combination of commodities at which Consumers receives the same amount of Utility.

Here 1 commodity is a good and other is a garbage.

Thus, Suppose now you are consuming O amount of good and B amount of garbage and you are getting utility = U. Now suppose You increase amount of good from O to O", this will increase your utility but as Indifference curve shows the combination of commodities at which Consumers receives the same amount of Utility. So you have to change the amount of Garbage such that your utility gets decreased and get back to U. If you increase garbage then your utility decreases and when you decrease garbage then your utility will increases.

Thus, in order to decrease utility, you should increase the amount of garbage from B to B".

Hence In order to be on the indifference curve if you increase the amount of good then you again have to increase the amount of Garbage. Hence There is a positive relation between amount of Garbage and amount of Good and thus Indifference curve will be Positively Sloped.

Hence, This Statement is True.

Rahul Sunny answered 1 year ago

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