Bundles A (5 bananas, 10 mangoes), B (7 bananas, 10 mangoes) and C (9 bananas, 10 mangoes) are offered to a consumer. The marginal utility of both goods is positive for her. Which of the following is correct?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → C lies on the highest indifference curve of the three.
All three bundles have the same 10 mangoes; only bananas differ. With positive marginal utility, more bananas mean more satisfaction, so C (9 bananas) is on the highest indifference curve.
Option (1) C lies on the highest indifference curve of the three. — Correct. C has the most bananas and no fewer mangoes.
Option (2) A and C lie on the same indifference curve. — Incorrect. C has more bananas than A, so it gives more satisfaction and lies on a higher curve.
Option (3) B lies on a lower indifference curve than A. — Incorrect. B has 2 more bananas than A, so it lies on a higher curve.
Option (4) A lies on the highest indifference curve of the three. — Incorrect. A has the fewest bananas, so it lies on the lowest curve.
NCERT (2026-27): “2.Higher indifference curve gives greater level of utility: Consider the different combination of bananas and mangoes, A, B and C depicted in table 2.4 and figure 2.7. Combinations A, B and C consist of same quantity of mangoes but different quantities of bananas. Since combination B has more bananas than A, B will provide the individual a higher level of satisfaction than A. Therefore, B will lie on a higher indifference curve than A, depicting higher satisfaction. Likewise, C has more bananas than B (quantity of mangoes is the same in both B and C). Therefore, C will provide higher level of satisfaction than B, and also lie on a higher indifference curve than B. …” “As long as marginal utility of a commodity is positive, an individual will always prefer more of that commodity, as more of the commodity will increase the level of satisfaction.” |