a consumer consumes only 2 goods if price of one good falls indifference curve will??
shift upward, shift downward, can shift bth upward and downward or does not shift
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Answered by
17
Heya,,,
If consumer consumes only two goods and if price of one good falls then....
** There will be no impact of price fall on Indifference Curve....
** IC will not shift or move in any direction...
Because....
IC is s curve that shows only monitor preferences , and marginal rate of substitutions that depends on willingness not on prices...
If consumer consumes only two goods and if price of one good falls then....
** There will be no impact of price fall on Indifference Curve....
** IC will not shift or move in any direction...
Because....
IC is s curve that shows only monitor preferences , and marginal rate of substitutions that depends on willingness not on prices...
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Does not shift or move in any direction is the correct answer.
A consumer consumes only two goods, if price of one good falls indifference curve does not shift either upward or downward. There is no impact of prices here. It shows a combination of two goods that give a consumer equal satisfaction and utility thereby making the consumer indifferent.
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