Practicing Success
Which of the following statement is not true? |
Indifference curves can intersect each other Total utility is maximum when Marginal utility is zero Utility is subjective concept which varies from person to person Budget line slopes downwards |
Indifference curves can intersect each other |
When 2 indifference curves intersect each other, they give absurd conclusions (points on different IC's give equal satisfaction, which cannot hold true). This can be proved with the help of transitivity of preferences.
From the graph it can be denoted that a = b (as they both are on the same IC), also, a = c ( as they both are on the same IC), from the transitivity theorem, we can say that b = c, but in reality b ≠ c, because both lie on different IC. C > B in terms of satisfaction. |