If indifference curve touches Y-axis, what would that mean for commodity on the X-axis?
Answer & explanation
Correct answer: option 3
The correct answer is Option 3: The commodity on X-axis is zero
When the indifference curve touches the Y-axis, it indicates that the consumer is consuming zero units of the commodity on the X-axis while consuming some amount of the commodity on the Y-axis. This is because all of their consumption is focused on the Y-axis commodity.
An indifference curve represents all combinations of two goods that provide a consumer with equal satisfaction or utility.
-
If the indifference curve touches the Y-axis, it means that at that point, the consumer is consuming only the Y-axis good and none of the X-axis good.
-
So, the quantity of the good on the X-axis is zero at that point.