Question

The graphical representation of combinations of two goods which provide equal satisfaction to the consumer is called:

• A. Indifference Curve
• B. Iso-utility Curve
• C. Budget Line
• D. Both (A) and (B)

Hint:

The indifference curve represents all combinations of two goods that give the consumer the same level of satisfaction or utility.

Answer 1

The Correct Option is A

Step 1: Understanding the question.
The question asks about the graphical representation of combinations of two goods that provide equal satisfaction to the consumer. This is a concept in microeconomics, known as the "Indifference Curve." An indifference curve shows all possible combinations of two goods that give the consumer the same level of satisfaction or utility.

Step 2: Explanation of the options.
(A) Indifference Curve: This is the correct answer. The indifference curve represents different combinations of two goods that provide equal satisfaction to the consumer.
(B) Iso-utility Curve: While this option is related to the concept of equal satisfaction, the term "Indifference Curve" is more widely used and accurate.
(C) Budget Line: A budget line represents all possible combinations of goods a consumer can buy given their income and the prices of the goods. It doesn't represent equal satisfaction, but rather shows the consumer's constraints.
(D) Both (A) and (B): While both options are related to equal satisfaction, the term "Indifference Curve" is the most appropriate.

Step 3: Conclusion.
The correct answer is (A) Indifference Curve, as it represents combinations of goods that provide equal satisfaction to the consumer.