Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Which of the following statement is not true?

Options:

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

Correct Answer:

Indifference curves can intersect each other

Explanation:

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.